Canada’s main stock index sat flat on Friday, dragged by losses in energy and financial names and as China’s retaliatory tariffs on U.S. goods revived trade war concerns.
At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite index was down 0.09 points at 16,409.07.
Eight of the index’s 11 major sectors were lower, with financial down 0.3 per cent .
Top drags among financials were shares of Toronto-Dominion Bank, which dipped 0.3 per cent, and a 1.1-per-cent drop in shares of Fairfax Financial after quarterly results.
The energy sector dropped 0.5 per cent as oil prices edged lower after easing on persistent supply concerns as Russia increased production in July and Saudi Arabia cut the price of crude for its Asian customers.
The S&P and Dow edged higher on Friday as a batch of strong earnings overshadowed worries of an escalating trade war between the United States and China, after Beijing proposed new tariffs on $60 billion worth of U.S. goods.
China’s retaliatory tariffs on U.S. goods ranged from liquefied natural gas (LNG) to certain types of aircraft and came after President Donald Trump proposed 25-per-cent tariffs on $200-billion worth of Chinese imports.
Trade-sensitive stocks such as Boeing and Caterpillar were lower. LNG exporter Cheniere Energy Inc dropped 2.6 per cent.
“Markets are viewing China’s move as another part of the tit-for-tat, so far nothing has been imposed and it is still in discussion,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
The S&P consumer staples sector rose 1.47 per cent and led gains among the major S&P sectors.
Kraft Heinz jumped 8.1 per cent and was the biggest boost to the sector after the company topped quarterly profit and revenue estimates.
Take-Two jumped 11.8 per cent, the most on the benchmark S&P 500, after the videogame maker’s quarterly revenue topped estimates.
“There is a positive sentiment with earnings. The economy is still doing alright despite the trade policy uncertainty,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
Economic data showed U.S. job growth slowed more than expected in July as employment in the transportation and utilities sectors fell, but a drop in the unemployment rate suggested that the labor market was tightening.
The Dow Jones Industrial Average was up 55.36 points, or 0.22 per cent, at 25,381.52, the S&P 500 was up 4.71 points, or 0.17 per cent, at 2,831.93 and the Nasdaq Composite was down 6.64 points, or 0.09 per cent, at 7,796.04.
Earnings till date have been robust. Of the 406 companies, part of the S&P 500, that have reported earnings, 78.6 per cent have topped analysts’ expectations, according to Thomson Reuters I/B/E/S.
Only two of the 11 major S&P sectors were lower. The energy sector fell 0.78 per cent on the back of lower crude oil prices.
Symantec slipped 13.9 per cent, and was the biggest decliner on the S&P, after the antivirus software maker lowered its yearly revenue forecast.
Dish jumped 7.3 per cent after the satellite TV services provider reported a better-than-expected quarterly profit.
Brent oil futures steadied under $74 a barrel on Friday, holding onto gains from the previous session as trade concerns provided a headwind to a further rally.
U.S. West Texas Intermediate (WTI) crude futures were down 27 cents at $68.69 a barrel. Brent crude futures were at $73.42 per barrel, down 3 cents from their last close.
“There is a strong demand backdrop here for WTI particularly,” said John Kilduff, a partner at Again Capital Management in New York. Crude stockpiles at the Cushing, Oklahoma storage hub are at a nearly 4-year low, and are expected to fall further in the coming week. “That is helping to support the market despite some decent headwinds from trade.”
Low stocks were still providing a floor as overall U.S. crude inventories are below the 5-year average of around 420 million barrels.
Concerns about demand from China also increased Friday as state oil major Sinopec cut its purchases of U.S. crude. China’s Unipec, the trading arm of state oil major Sinopec, has suspended crude oil imports from the United States due to a growing trade spat between Washington and Beijing, three sources familiar with the situation said on Friday.
China has said it plans to impose tariffs on liquefied natural gas, raising concerns that it could also impose tariffs on oil, Kilduff said.
“Chinese demand from the independent refiners is also lower while the escalating trade war also doesn’t help sentiment,” said Warren Patterson, commodities strategist at ING.
Reuters