At midday: TSX rises as resource stocks gain after U.S. jobs data
Canada’s main stock index pushed higher on Friday with mining and energy stocks big beneficiaries of a weak U.S. jobs report that weighed on the U.S. dollar and, in turn, boosted
The heavyweight energy group climbed 1.5 per cent as crude rose about 2 per cent, after U.S. employment growth eased more than expected last month after two straight months of robust gains, which could rule out an interest rate hike by the Federal Reserve this month.
The most influential movers on the index included Suncor Energy Inc., which rose 1.4 per cent to $35.70, and Canadian Natural Resources Ltd., which advanced 2 per cent to $41.59.
At 11:26 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index rose 123.50 points, or 0.84 per cent, to 14,806.69.
There were 10 risers for every falling stock, with nine of the index’s 10 main groups in positive territory.
The materials group, which includes precious and base metals miners and fertilizer companies, added 1.9 percent, as the weaker greenback also boosted prices for gold and copper. [GOL/][MET/L]
Barrick Gold Corp. advanced 0.3 per cent to $23.38 and Goldcorp Inc. rose 1.7 per cent to $20.77. Diversified miner Teck Resources advanced 3.1 per cent to $22.28.
The financials group gained 0.8 per cent and industrials rose 0.2 per cent.
Canada’s trade deficit in July unexpectedly shrank on stronger non-energy exports, a sector the Bank of Canada says is crucial to helping revive an economy hit by low oil prices. <ECONCA>
Wall Street was higher on Friday after data showed U.S. employment growth in August was slower than expected, which could rule out an interest rate increase this month.
The Labor Department’s monthly jobs report showed non-farm payrolls rose by 151,000 last month, while the unemployment rate remained unchanged at 4.9 percent.
Economists polled by Reuters had forecast addition of 180,000 jobs last month.
“This mixed jobs report puts the Fed in a tricky situation,” said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.
“It’s not all around strong enough to assure a September interest rate hike. But it’s solid enough to engender a heated policy discussion, especially given the unintended consequences and collateral damage of a prolonged period of ultra low interest rates.”
Rate hike probabilities for September and December had risen after last Friday’s remarks by Fed Chair Janet Yellen that the case for raising rates had strengthened in recent months. The Fed next meets on Sept. 20-21.
The odds of a rate hike in September stood at 24 per cent, according to CME Group’s FedWatch tool, while traders were pricing in a 56 percent chance of a December rate hike.
With the labour market near full employment, a slowdown in job growth is normal. Ms. Yellen has said the economy needs to create just under 100,000 jobs a month to keep up with population growth.
The Dow Jones industrial average was up 99.71 points, or 0.54 per cent, at 18,519.01, the S&P 500 was up 11.1 points, or 0.51 per cent, at 2,181.96 and the Nasdaq Composite was up 30.01 points, or 0.57 per cent, at 5,257.21.
All 10 major S&P sectors were higher, with the consumer staples index’s 0.77-per-cent rise leading the advancers.
Oil prices rose about 2.3 per cent after the jobs report weighed on the dollar.
Lululemon Athletica shares were down 9.4 per cent at $69.47 after the Canadian yoga wear retailer reported quarterly comparable-sales growth below expectations.
Ambarella was down 6.6 per cent at $67.13 after the video processing chip maker reported a fall in quarterly sales.
Smith & Wesson was down 6.5 per cent at $27.66 after brokerage Craig Hallum downgraded the gun maker. Sturm Ruger was also down 2.8 per cent at $60.45.
Oil prices rose more than 2 per cent on Friday as a report showing weaker U.S. jobs growth in August suppressed the dollar, pushing up commodities, but crude futures remained on track for a big weekly loss on glut concerns.
U.S. employment growth eased more than expected last month after two straight months of robust gains and wage gains moderated, casting doubts the Federal Reserve Open Market Committee will raise interest rates at its Sept. 20-21 meeting.
The dollar index weakened after the jobs report, making oil and other greenback-denominated commodities more affordable for holders of the euro and other currencies.
Oil traders and investors will be on the lookout later in the afternoon for the weekly rig count report from energy services provider Baker Hughes. The oil rig count was unchanged last week after eight weeks of consecutive rises, but traders and analysts expect it to continue rising with the recovery in crude prices.
Brent crude futures were up $1.25, or 2.8 per cent, at $46.73 a barrel. It was down 6 per cent on the week, on track for its biggest weekly loss since late July.
U.S. West Texas Intermediate futures gained $1.16 cents, or 2.7 per cent, at $44.32. WTI was on course to an 7-per-cent drop on the week, its most since February.
“With the FOMC likely to stay in September and the dollar dictating where we could go, it’s quite likely oil will hold at mid-$40 levels,” said Carl Larry Director, director of business development for oil & gas at Frost & Sullivan.
“But more telling of how oil performs will be the rig count in coming weeks and OPEC gestures to support prices.”
Oil rose earlier in the session on comments by Russia favorable to OPEC’s hopes of implementing an output freeze with other oil producers.
The Organization of the Petroleum Exporting Countries, led by Saudi Arabia and other big Middle East crude exporters, will meet non-OPEC producers led by Russia at informal talks in Algeria between Sept. 26 and 28 to discuss a freeze output.
Russian President Vladimir Putin said in a Bloomberg interview such an output would be right to support prices.
If OPEC fails to strike a deal in Algeria, it is expected to try more action to prop the market its policy meeting in Vienna on Nov. 30.
Many analysts remain skeptical that it will be successful.
“The oil price will remain volatile over the coming weeks,” said Hans van Cleef, senior oil economist at ABN Amro.Report Typo/Error