Canada’s main stock index edged higher on Friday as financial stocks gained following a strong domestic jobs data report which cemented expectations of fourth interest rate hike of the year next week when the Bank of Canada makes its next policy announcement.
The Toronto Stock Exchange’s S&P/TSX composite index closed up 105.17 points, or 0.65 per cent, at 16,371.78. The TSX is up 1 per cent for the year.
Financial stocks rose 0.4 per cent with Onex up 2.1 per cent, Brookfield gained 1.2 per cent and Royal Bank rose 0.6 per cent.
The latest data showed Canadian economy added 31,800 jobs in June, while a Reuters poll predicted an increase of 24,000 positions, cementing expectations the Bank of Canada will raise interest rates when it meets next week.
The Canadian dollar traded remained higher after the jobs report and was up at 76.32 cents US.
Another report showed the country’s trade deficit grew on a sharp rise in imports of airlines and gasoline.
Telecom stocks were one of the sectors with the largest gain, up 1.6 per cent. Rogers was up 1.8 per cent, BCE gained 1.6 per cent and Telus added 1.4 per cent.
Energy stocks were the top gainers, up 1.4 per cent, with Cenovus energy up nearly 4 per cent, Canadian Natural Resources up 2.6 per cent, and was the biggest contributor to the TSX’s gain. Husky Energy added 1.5 per cent.
Oil was mixed on Friday, with short-covering pushing up U.S. crude futures while Brent slipped on global trade tensions and increased Saudi production.
West Texas Intermediate crude futures gained 80 cents to US$73.74. Global benchmark Brent was down 29 cents at US$77.10 a barrel. For the week, WTI was on track for a loss of about 0.5 per cent after hitting a 3-1/2-year high on Tuesday. Brent was on track for about a 3 per cent loss.
Tech stocks were also up 1.3 per cent, with Shopify up 2.6 per cent and Constellation Software up 1.4 per cent.
Nine of the 11 TSX sectors were higher. The health care and utilities sectors were the two sectors that declined.
The leading percentage gainers were Transcontinental Inc., up 5.5 per cent, Labrador Iron Ore Royalty Corp., up 4.2 per cent, and Cenovus Energy Inc., higher by 4.1 per cent.
Lagging shares were Centerra Gold Inc., down 6.0 per cent, New Gold Inc., down 3.5 per cent, and Intertape Polymer Group Inc., lower by 2.3 per cent.
The most heavily traded shares by volume were Bombardier Inc., Aurora Cannabis Inc. and Cenovus Energy Inc.
In the U.S., the S&P 500 and the Nasdaq rose to their highest levels in two weeks on Friday as strong U.S. jobs growth blunted the impact of an escalating U.S.-China trade war.
Based on the latest available data, the Dow Jones Industrial Average rose 94.83 points, or 0.39 per cent, to 24,451.57, the S&P 500 gained 23.11 points, or 0.84 per cent, to 2,759.72 and the Nasdaq Composite added 101.96 points, or 1.34 per cent, to 7,688.39.
All of the 11 major S&P 500 sectors posted gains.
Nonfarm payrolls increased by 213,000 jobs last month, the U.S. Labor Department said, topping expectations of 195,000, while the unemployment rate rose from an 18-year low to 4 percent and average hourly earnings rose 0.2 percent. The moderate wage growth allayed fears of a strong build-up in inflation pressures.
The positive news from the U.S. employment report offset, at least for the moment, heightened trade tensions between the United States and China. The two countries slapped tit-for-tat tariffs on $34 billion worth of each other’s imports on Friday. Beijing accused the White House of triggering the “largest-scale trade war.”
U.S. stock futures traded downward on Friday morning after the tariffs went into effect but reversed course after the release of the jobs report. By the market open, stocks were rising.
“The market turned its frown upside down, and it’s been in the green ever since,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh. “This really is the best outcome we could have hoped for, more jobs without a whole lot of wage pressures.”
Although U.S. stocks appeared minimally affected by U.S. and Chinese tariffs going into effect, some investors warned that prolonged trade tensions could roil the markets, as they have on several occasions this year.
U.S. President Donald Trump also warned the United States may ultimately target over US$500-billion worth of Chinese goods, an amount that roughly matches its total imports from China last year.
“You’re going to get some stalling of the market, should trade issues begin to accelerate,” said Gerry Sparrow, a portfolio manager for Interactive Brokers Asset Management, a Boston-based online investing company.
Shares of Biogen Inc rose 19.6 per cent and were on track for their biggest percentage gain in more than 14 years after the company and Japanese drugmaker Eisai Co. said their Alzheimer’s drug showed promise in a mid-stage trial. Biogen added the most gains to the S&P 500.
The S&P 500 healthcare index rose 1.5 per cent, the greatest percentage gain among the S&P’s major sectors, while the Nasdaq biotech index jumped 3.6 per cent.
Besides Biogen, technology heavyweights Apple Inc., Microsoft Corp. and Facebook Inc. provided the biggest boost to the markets. The S&P technology index rose 1.3 per cent.
With files from Reuters