Canadian equities were flat on Friday, as oil prices gained and takeover speculation for health-care companies increased.
The Standard & Poor's/TSX Composite Index fell 0.05 per cent, or 7.2 points, to 13,874 in Toronto. The benchmark gauge rose 1.71 per cent this week. The Canadian stock market is still one of the best-performing developed markets in the world, with the S&P/TSX up 6.6 per cent.
Investors also assessed mixed economic data. A report today showed Canada's annual inflation rate slowed for a second month in March to 1.3 per cent, led by cheaper gasoline and smaller markups at auto dealers. In separate data, Canadian retail sales had a surprise gain in February, led by motor vehicle dealers.
The resource-dominate S&P/TSX remains closely linked to moves in commodity prices, as a rebound in producers has fuelled a more than 15-per-cent recovery since the Jan. 20 low. Oil prices rose on Friday and notched their third straight week of gains as market sentiment turned more upbeat amid signs a persistent global supply glut may be easing. Strong gasoline consumption in the United States, increasing signs of declining production around the world and oilfield outages have underpinned a return to investment in the sector, traders said.
Energy producers increased 1.5 per cent as Kelt Exploration Ltd. and Baytex Energy Corp. both rallied more than 3.7 per cent.
Health-care companies jumped 2.1 per cent, the most in the S&P/TSX out of 10 groups. Concordia Healthcare Corp. rose 6 percent after reports that Blackstone Group LP is considering a takeover of Toronto-based Concordia.
Among the biggest winners on Friday, Valeant Pharmaceuticals International Inc. advanced 7.3 per cent for a third day of gains. The company is said to be in talks to hire Perrigo Co.'s chief executive officer to replace outgoing CEO Michael Pearson. Valeant said in March that Pearson would leave the drugmaker once a replacement was found, part of a broader overhaul that included adding activist investor Bill Ackman to its board.
Seven out of the ten groups in the S&P/TSX fell. Materials stocks posted the steepest declines as gold fell 1.3 per cent, followed by technology companies.
Disappointment with earnings pummeled shares of Microsoft Corp. and Google parent Alphabet Inc., sending the Nasdaq 100 Stock Index to the steepest drop in two weeks.
While the tech-heavy Nasdaq slid, gains in crude oil boosted energy producers, curbing the Standard & Poor's 500 Index's decline. Technology shares in the benchmark index capped the biggest slide since Feb. 5, with Microsoft and Alphabet down at least 5 per cent. Banks rebounded to a three-month high, and Norfolk Southern Corp. jumped the most since November as earnings beat estimates and the railroad increased its cost-cutting goal.
The Nasdaq 100 dropped 1.5 per cent to 4,474.19 in New York, paring a 2.2-per-cent retreat, with Microsoft falling the most in almost 15 months. The S&P 500 rose less than 0.1 per cent to 2,091.63, wiping out a 0.5-per-cent decline and gained 0.5 per cent for the week.
"The big tech names that have reported in the last day are having a negative influence on major index returns," said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54-billion. "Valuations in the U.S. equity market are full, so market participants are becoming more demanding about what they're expecting for future gains. The news on the economic front has been steady, if not unspectacular, and the earnings picture has been mixed at best."
With the flow of corporate earnings picking up, equities have lost momentum in the last three sessions as results failed to inspire investors to push a rally that's lifted the S&P 500 more than 14 per cent from a 22-month low in February. A recovery in oil prices, optimism that central banks will continue their efforts to boost growth and signs of improvement in China had bolstered the rebound, with the gauge this week briefly coming within 1 per cent of a record set last May.
Oil advanced to a five-month high as declining U.S. crude production provided more evidence that the market is rebalancing.
Futures rose 1.3 per cent in New York, bringing this week's gains to 8.3 per cent. U.S. crude output dropped a sixth week, while production in Colombia fell last month. Lower prices have curbed investment in new fields. Schlumberger Ltd. cut more jobs in the first quarter as the world's largest provider of oilfield services sees the industry in an unprecedented downturn.
"What we're hearing from the oil services companies is just carnage," said Scott Roberts, portfolio manager and co-head of high yield who manages $2.7-billion at Invesco Advisers Inc. in Atlanta. "The cutbacks are having a big impact on production. U.S. production."
The International Energy Agency reiterated on Thursday it expects non-OPEC output to fall by about 700,000 barrels a day this year, which would be the sharpest drop in a quarter century. U.S. production fell to 8.95 million barrels a day, the Energy Information Administration said Wednesday. Colombian output slipped 4 percent in March to 916,000 barrels a day, according to the mines and energy ministry.
West Texas Intermediate for June delivery rose 55 cents to settle at $43.73 a barrel on the New York Mercantile Exchange. The gain capped a third-consecutive weekly increase.
Brent crude for June settlement advanced 58 cents, or 1.3 per cent, to $45.11 a barrel on the London-based ICE Futures Europe exchange. Prices climbed 4.7 per cent this week. The global benchmark closed at a $1.38 premium to WTI.
Energy shares followed futures higher with Southwestern Energy Co. having the biggest gain on the Standard & Poor's 500 Index. The S&P 500 Oil & Gas Exploration and Production Index climbed to the highest since Dec. 2.
The lows of the first quarter are "likely behind us," Goldman Sachs Group Inc. said in a note dated April 22. Prices have risen from their lows amid a spate of large supply disruptions caused by pipeline outages and worker strikes, Goldman said.
The number of active oil rigs fell to 343 this week, the least since November 2009, according to Baker Hughes Inc. The number is down to less than a fourth of the 2014 peak.
With files from Reuters