Canada’s main stock index opened higher Friday as stronger oil prices lifted energy stocks. At the opening of trade, the Toronto Stock Exchange’s S&P/TSX composite index was up 16.2 points, or 0.08%, at 20,391.68, with energy stocks jumping 1%.
The Dow and S&P 500 also opened higher, though the Nasdaq was struggling to get out of the red, in the wake of jobs numbers in the U.S. that were stronger than expected.
The major North American indexes appear poised to challenge record highs again today, even as concerns get even louder that rising cases of the Delta coronavirus variant could hurt the economic recovery.
U.S. nonfarm payrolls increased by 943,000 jobs last month after rising 938,000 in June. Economists polled by Reuters had forecast payrolls increasing by 870,000 jobs. The unemployment rate fell to 5.4% from 5.9% in June.
“Labor market conditions appear to be healthy at the start of third quarter as labor-intensive service businesses continue to hire given strong pent-up demand,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.
Capital Economics, in a note, said the strong U.S. jobs numbers today, which includes upwards revisions to previous months, “suggests economic growth may be holding up better than we had feared and leaves open the possibility of Fed Chair Jerome Powell dropping a stronger hint that tapering is on the way at Jackson Hole in three weeks’ time.”
Canada added 94,000 jobs in July, missing analyst expectations, and the unemployment rate fell to 7.5%, Statistics Canada said on Friday. Analysts surveyed by Reuters had expected a gain of 177,500 jobs and the unemployment rate to fall to 7.4%.
But Street forecasts for the Canadian jobs report varied widely, which may limit any market reaction to the domestic numbers.
Capital Economics, in a note, called the Canadian job gains “something of a disappointment given the lifting of coronavirus restrictions at the start of the month in many provinces,” But it was encouraged by a solid 1.3% month over month gain in total hours worked. “With employment in accommodation & food services still almost 20% below its pre-pandemic peak and indoor dining only reopening during the July survey week, there is plenty of scope for even stronger gains in employment over the coming months,” it said.
The much-awaited jobs numbers come on the heels of data Thursday that showed a further decline in U.S. unemployment claims last week and a spate of strong corporate earnings reports, which helped lift the Nasdaq and S&P 500 indexes to record closes on Thursday.
The TSX Thursday also closed at a record, getting a boost from the gains on Wall Street but also a string of better-than-expected earnings reported from a broad range of Canadian companies during the day.
All of the North American main indexes are set to end the week with nominal gains as a stronger-than-expected earnings season overshadowed concerns about the pace of economic growth and higher inflation.
In corporate news this morning, Magna International shares are down 2.5% after it cut its full-year sales forecast, citing a slowdown in automobile production as a semiconductor shortage plagues the sector. Magna’s revenue for the year is now expected to be between $38 billion and $39.5 billion, compared with a previous forecast of $40.2 billion to $41.8 billion. Magna reported net income attributable of $424 million, or $1.40 per share, in the quarter ended June 30, compared to a loss of $647 million, or $2.17 per share, a year earlier. Analysts on average expected the company to earn $1.38 per share, according to Refinitv data. Total sales more than doubled to $9.03 billion, but missed estimates of $9.29 billion.
And in a further development concerning the company, chipmaker Qualcomm Inc said on Thursday it had offered to buy Swedish auto parts maker Veoneer Inc for $4.6 billion, an 18.4% premium to a bid in July by Magna International Inc that was accepted by Veoneer’s board.
Meanwhile, the cannabis sector, which enjoyed a strong rally on Thursday, should be buzzing again today. Pot producer Canopy Growth Corp reported a smaller adjusted core loss in its first quarter on Friday, as it benefited from cost cuts and a rise in cannabis use during the coronavirus pandemic. Its adjusted core loss narrowed to C$63.6 million from C$92.2 million a year earlier. Revenue rose 23% to C$136.2 million. The company’s shares were down 2% in early trading.
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