As global stocks edged lower, Canada’s main stock index enjoyed an afternoon rally on Friday.
The Toronto Stock Exchange’s S&P/TSX composite index closed unofficially up 62.65 points, or 0.39 per cent, at 16,301.91.
Financial stocks finished 0.5 per cent higher. Toronto-Dominion Bank and Great-West Lifeco Inc. were up 1 per cent, while Manulife Financial Corp. and Sun Life Financial Inc. rose 0.9 per cent and 0.8 per cent higher, respectively.
The industrial sector increased 0.8 per cent with Westshore Terminals Investment Corp. up 2.9 per cent and Ritchie Bros Auctioneers Inc. rising 2.4 per cent.
The energy sector dropped 0.4 per cent, while the materials sector, which includes precious and base metals miners and fertilizer companies, added 0.5 per cent as gold prices hit their highest since April last year.
A fall in marijuana stocks led a 0.8-per-cent decline in the health care sector. Cronos Group Inc. lost 5 per cent, while Hexo Corp. was down 3.7 per cent.
Global equity markets lost ground on Friday as weak Chinese data stoked investor anxieties over a global growth slowdown and mounting fears of a U.S.-Iran confrontation added to geopolitical uncertainty, sending oil prices higher.
However, positive U.S. retail sales data helped boost the dollar and short-term Treasury yields.
Attacks on two oil tankers in the Gulf of Oman lifted oil prices, although they remained on track for a weekly loss on worries a sluggish world economy could hurt demand.
China’s industrial output growth came in well below expectations, slowing to a more than 17-year low, suggesting Beijing was feeling the sting of the protracted trade war with the United States.
“The China data certainly is far-reaching, impacting not only China but global markets as well,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “That is one of the big overhangs today.”
“The other one is what’s happening in the Persian Gulf, which could turn into a military response versus a peaceful response,” Ghriskey added. “There’s still a lot of uncertainty.”
A warning of a broad slowdown in chip demand from chipmaker Broadcom Inc underscored the effects of the U.S.-China tariff dispute, dragging on European as well as U.S. equity indexes.
The Dow Jones Industrial Average fell 17.16 points, or 0.07 per cent, to 26,089.61, the S&P 500 lost 4.65 points, or 0.16 per cent, to 2,886.99 and the Nasdaq Composite dropped 40.47 points, or 0.52 per cent, to 7,796.66.
MSCI’s broad gauge of stocks across the globe shed 0.33 per cent, while the pan-European STOXX 600 index lost 0.40 per cent.
The Federal Reserve is set to hold its two-day monetary policy meeting June 18-19, with investors closely watching its outcome for clarity on when or whether to expect a near-term rate cut.
A Reuters poll showed a growing number of economists expect the Fed to cut interest rates this year, although the majority still see it holding steady.
“The Fed could surprise us and cut rates,” added Ghriskey. “I wouldn’t put it out of the realm of possibility that we could see the Fed ease next week, but right now the futures aren’t anticipating that.”
The U.S. dollar index climbed to its highest in almost two weeks on Friday after the encouraging retail sales data for May eased fears that the U.S. economy is slowing sharply.
The dollar index rose 0.57 per cent, with the euro down 0.59 per cent to $1.1209.
The retail data also sent short-dated U.S. Treasury yields higher, flattening the yield curve and diminishing expectations for a Fed rate cut in June.
Benchmark 10-year notes last fell 1/32 in price to yield 2.0942 per cent, from 2.091 per cent late on Thursday.
Gold turned negative after hitting a 14-month peak earlier in the session.
Spot gold dropped 0.1 per cent to $1,340.16 an ounce.
Oil rose about 1 per cent on Friday after attacks on two oil tankers in the Gulf of Oman this week raised concerns about potential supply disruptions, but prices remained on track for a weekly loss on fears that trade disputes will dent global oil demand.
Brent futures settled 70 cents, or 1.1 per cent, higher at $62.01 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 23 cents, or 0.4 per cent, to close at $52.51.
The attacks on oil tankers near Iran and the Strait of Hormuz pushed up oil prices by as much as 4.5 per cent on Thursday.
It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies as tensions increase between the United States and Iran. Washington blamed Iran for Thursday’s attacks, prompting a denial and criticism from Tehran.
On Friday, a U.S. official said Iranian military fast-boats in the Gulf of Oman were preventing two privately-owned tug boats from towing away one of the damaged tankers.
“The possibility of what we’ve seen (in the Middle East) over the past few days could intensify into the weekend and traders are reluctant to be short in front of that,” said Anthony Headrick, energy market analyst at CHS Hedging LLC in Inver Grove Heights, Minnesota, noting “The recent headline of restricting those tug boats got some traders off the fence to cover shorts.”
Still, Brent registered a weekly decline of around 2 per cent, putting it down for a fourth week in a row, while U.S. crude lost almost 3 per cent.
“The deteriorating demand outlook is holding back prices, despite these tensions,” said John Kilduff, a partner at Again Capital LLC in New York.