Gold bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich March 3, 2014.MICHAEL DALDER/Reuters
Resource stocks gave a major push to the Toronto stock market Friday morning amid mixed North American jobs reports.
The S&P/TSX composite index jumped 136.16 points to 14,699.54 as energy and mining stocks benefitted from commodity prices that ran ahead as the U.S. dollar weakened following a disappointing read for American job creation during October.
The weaker American currency and a strong Canadian employment report sent the loonie up 0.52 of a cent to 88.04 cents (U.S.).
The economy created 43,100 jobs last month. Economists had forecast Canada would actually shed about 5,000 jobs after adding 74,000 jobs in September. The Canadian unemployment rate dropped sharply to 6.5 per cent from 6.8 per cent, the lowest since November 2008.
New York markets were lacklustre after the U.S. economy generated 215,000 positions during the month, lower than the 235,000 reading that economists had expected. However, the U.S. jobless rate also fell, dropping to 5.8 per cent from 5.9 per cent. Also, U.S. job creation estimates for the past two months was revised upward by 31,000.
New York's Dow industrials inched up 0.32 of a point to 17,554.79, the Nasdaq declined 9.32 points to 4,629.15 while the S&P 500 index was up 1.77 points to 2,032.98.
Some analysts were curious about the market reaction.
"It's an example of shoot first and ask questions later," said Craig Jerusalim, portfolio manager at CIBC Asset Management.
"It wasn't all that bad. There's still over 200,000 jobs (created), the participation rate picked up, the unemployment rate came down nicely, people are going back to work. Why? Because the economy is starting to gain some proper momentum and fundamental strength in my view."
In other corporate developments, Bloomberg reported that Canadian Pacific Railway could be interested in going after Norfolk Southern, the second-largest railroad in the eastern U.S. CP made a pitch to U.S. carrier CSX during October but talks didn't result in a deal. Canadian Pacific director Bill Ackman, founder of CP shareholder Pershing Square Capital, said CSX is not the only potential merger partner. "I think the risk with CSX is we merge with" a rival to the Jacksonville, Florida-based carrier. CP gained $1.04 to $236.05 while Norfolk Southern gained 2.3 per cent.
Senior care company Extendicare is selling its U.S. business for about $922-million. Its stock was down 11 cents to $8.
The TSX could be in for a modest advance at the end of a volatile week when energy shares were whipsawed as a move by Saudi Arabia to cut prices to its American customers pushed oil prices to three year lows. A higher U.S. dollar has also pressured commodities and resource stocks but the energy group, which makes up 25 per cent of the TSX, looked to end the week higher but still in negative territory for the year.
"You really had this perfect storm brew for the downside," added Jerusalim.
Resource stocks were supported by commodities which advanced while the greenback weakened following the American jobs data.
The gold sector led TSX advancers, up 5.3 per cent while December bullion gained $20.10 to $1,162.70 (U.S.) an ounce.
The energy sector rose 2.6 per cent while December crude was $1.13 higher to $79.04 a barrel.
December copper was up two cents to $3.03 a pound and the base metals sector ran ahead 4.15 per cent.