Canada’s main stock index ended marginally lower on Friday but still notched a hefty weekly gain, as investors cheered corporate earnings and shrugged off domestic data that showed the economy shedding jobs last month.
The S&P/TSX composite index ended down 2.59 points, or 0.01%, at 27,758.68, having pulled back from a record closing high on Wednesday.
For the week, the index was up 2.7%, its biggest weekly gain since September last year, as Shopify Inc took over as Canada’s most valuable publicly traded company. The e-commerce company reported on Wednesday quarterly results that impressed investors, sending its shares soaring more than 20%.
“The TSX has been benefiting this week from a generally positive response to earnings that have been coming out in Canada,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “We had a job decline in Canada which, combined with the disappointing U.S. numbers from last week, suggests the North American employment market is slowing and that the economy itself might be starting to slow.”
The Canadian economy shed 40,800 jobs in July, giving back some of the substantial gains seen in the prior month and sending the share of people employed in the population to an eight-month low.
Signs of slowing U.S. growth have fueled optimism over Federal Reserve interest rate cuts, helping to push U.S. stocks higher.
The TSX’s technology group added 0.7% on Friday, with shares of Open Text Corp climbing 10% after the software company beat estimates with its quarterly results.
The materials group, which includes metal mining shares, was up 0.6% as the prices of gold and copper climbed. U.S. gold futures hit a record high on uncertainty over whether country-specific U.S. import tariffs would apply to the most commonly traded sizes of gold bars.
The U.S. Customs and Border Protection service released a ruling on its website on Friday, which the gold industry interpreted as meaning that country-specific U.S. import tariffs could apply to the most-traded sizes of gold bars in the U.S.
December U.S. gold futures settled 1.1% higher at $3,491.30 per ounce after hitting a record $3,534.10 when the Financial Times first reported the news.
Spot gold eased 0.08% to $3,394.24 an ounce.
Shares of Lundin Gold ended 6.5% higher after the company reported quarterly results.
Sun Life Financial Inc was a drag. Its shares dropped 7.9% after the life insurer said it would miss a 2025 profit target for its dental business in the U.S. due to uncertainty in Medicaid funding.
Heavily weighted financials dipped 0.2% and consumer discretionary ended 1% lower.
Global equities rose, as investors clung to the view that U.S. interest rates may fall further this year, with European shares posting their biggest weekly gain in 12 weeks on strength from banking stocks.
Investors watched for signs of a potential Russia-Ukraine ceasefire after a report that the United States and Russia are aiming to reach a deal to halt the war in Ukraine. President Donald Trump on Thursday moved to reshape the U.S. central bank, nominating Council of Economic Advisers’ Chair Stephen Miran for a short-term board seat after Adriana Kugler’s abrupt exit.
Miran holds similar views to Trump, who has berated Powell for being “too late” in cutting rates, even though growth is holding up and inflation is ticking higher.
“It locks in a vote for rate cuts at all the meetings between now and the end of January,” said Ray Attrill, head of FX strategy at National Australia Bank in Sydney.
“Markets are already travelling with a very strong expectation that there will be a rate cut,” he added. “Though there’s a question mark over whether he’ll succeed in ratification in time for the September meeting.”
Bloomberg News reported that Fed Governor Christopher Waller was emerging as a leading contender for the role of Fed chair.
MSCI’s gauge of stocks across the globe rose 0.52%. On Wall Street, the Dow Jones Industrial Average rose 0.47% to 44,175.61, the S&P 500 added 0.78% to 6,389.45 and the Nasdaq Composite climbed 0.98% to 21,450.02, a record high.
The pan-European STOXX 600 index rose 0.2% to finish the week up more than 2% as largely upbeat corporate results and firming bets of more Fed rate cuts lifted prices from last week’s five-week lows. Shares also saw a lift from optimism that hefty U.S. tariffs that kicked in on Thursday would be subject to negotiation. Zurich’s SMI index gained as traders continued to shrug off Switzerland’s 39% U.S. tariff coming into effect.
“The effective shock (from tariffs) is there. So the question now is: How is it going to impact the economy and the data, and when? Because up to now, let’s be fair, it’s been less severe than most have anticipated,” Lombard Odier economist Samy Chaar said.
Overall tariffs may be lower than many had feared back in April, but they are at their highest in at least a century.
Relief over lower-than-expected duties may be short-lived as a result. For instance, the European Union now has a 15% tariff rather than the 50% that Trump had threatened, Chaar said.
“That’s the vulnerability in the market... It is focusing on the good news, which is not getting the 50%, but getting the 15%. And then the problem is that 15% is actually a big shock and, at some point, it’s going to show in the data,” he said.
U.S. Treasury yields rose on Friday, with the yield on the benchmark 10-year note poised for its first weekly gain in three weeks after a series of weak auctions. The yield on benchmark U.S. 10-year notes rose 3.9 basis points to 4.283%.
Brent oil futures settled up 0.24% at $66.59 per barrel and U.S. crude settled unchanged at $63.88 per barrel.
Expectations of a potential truce between Russia and Ukraine had weighed on oil prices earlier in the U.S. trading session. Both benchmarks were also under pressure from a tariff-hit economic outlook and finished with weekly losses.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed down 0.63%, while Japan’s Nikkei rose 1.85%.
Reuters, Globe staff