Canadian and U.S. stocks hovered near unchanged on Friday to close out with big weekly gains as Democratic challenger Joe Biden edged closer to victory in the presidential election, while the monthly employment reports underscored the hurdles still facing the economy.
Despite little change in Canada’s benchmark index, pot stocks on the TSX saw huge moves Friday - apparently on little fresh news, other than continued indications that Biden will be the next president and will be friendly to the industry’s legalization agenda in the U.S. Aurora Cannabis surged by a spectacular 55.8%; Cronos Group gained about 16% and Canopy Growth 10%. The covering of a large number of the shorts that had been built up in the cannabis sector was likely a key reason the stocks burst into action on Friday.
Weighing on Canada’s index was a 1.25% drop in the energy sector as the oil price fell 4% and settled below $40 a barrel on Friday for both Brent and West Texas Intermediate crude types. Rising global coronavirus cases stoked fears about lackluster demand and as drawn-out vote counting in the U.S. presidential election kept traders on edge. WTI dropped $1.65, or 4.25% to $37.14 a barrel. France reported record cases, intensifying concerns that additional lockdowns in Europe could weigh on demand.
Biden built on narrow leads in Pennsylvania and Georgia, putting him on the verge of winning the White House, although President Donald Trump has filed lawsuits in battleground states to contest the results.
Both the S&P 500 and Nasdaq notched their biggest weekly percentage gains since April as the prospect of a policy gridlock in Washington eased worries a Biden administration might tighten regulations on U.S. companies.
“It’s not fairytale land, we don’t go up every day so at some point you would think we would see a little bit of downward pressure,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago. The S&P 500 rose 7.3 per cent for the week.
Control of the U.S. Senate could hinge on four as-yet undecided races. If Republicans retain their majority, they would likely block large parts of Biden’s legislative agenda, including expanding healthcare and fighting climate change.
“There is some concern with regards to if Biden creeps ahead or wins Georgia then there is chance that those (Senate) seats will follow. That’s what people are reading into this,” said Yousef Abbasi, global market strategist at Stonex Group Inc, New York.
The government’s closely watched report showed unemployment dropped sharply to 6.9% last month from 7.7% in September, but job recovery slowed as fiscal support waned and coronavirus cases surged.
After the jobs report, U.S. Senate Majority Leader Mitch McConnell said economic statistics indicated Congress should enact a smaller coronavirus stimulus package that is highly targeted at the pandemic’s effects.
Unofficially, the Dow Jones Industrial Average fell 96.68 points, or 0.34%, to 28,293.5, the S&P 500 lost 4.05 points, or 0.12%, to 3,506.4 and the Nasdaq Composite dropped 4.43 points, or 0.04%, to 11,886.50.
Canada’s S&P/TSX Composite index closed down 0.09%, or 15.34 points, at 16,282.83.
Canadian job creation slowed in October to its weakest pace of the economic recovery, fresh data showed Friday, but showed resilience outside of industries that were targeted by new COVID-19 restrictions.
The labour market added 83,600 positions last month and the unemployment rate fell to 8.9 per cent from September’s 9 per cent, Statistics Canada said. Hiring slowed from around 378,000 jobs added in September and 246,000 in August. To date, Canada has recouped nearly 80 per cent of three million positions that were lost in March and April. A weaker month was expected.
Read more:
Stocks that saw action Friday - and why
Reuters, with files from Darcy Keith of The Globe and Mail