Canada’s main stock market rose more than 100 points to close out the week, driven by utilities, energy and financial stocks, while U.S. markets edged lower.
The S&P/TSX composite index closed up 115.30 points at 20,236.04.
“You’re seeing a big move up in commodities,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc. “Gold’s having a nice day, energy, which has been very topical late, is also having a pretty nice day and is kind of rallying, getting close to highs for 2023.”
He said the uptick was tied to economic data released Friday morning by Statistics Canada, which reported a softening of Canada’s labour market as the unemployment rate rose for a third consecutive month.
July saw the economy shed 6,400 jobs while the unemployment rate ticked up to 5.5 per cent. The federal agency said job losses last month were led by the construction industry, while the greatest job gains were made in health care and social assistance.
“It’s obviously a very volatile data series in Canada. Increasing interest rates are working, you’re seeing a slowdown in a lot of industries that have a high correlation to rising rates, notably the construction industry, which had a big contraction in jobs in the previous month,” said Archibald.
“The slowdown in employment is certainly continuing.”
While further rate hikes by the Bank of Canada are possible, Archibald said the central bank will likely take a wait-and-see approach if current trends continue.
“If we continue to see employment reports like this, where there’s either negative job creation or small, modest job creation, that’s going to get them to what they want, which is eventually that unemployment will probably tick up a little bit higher, and wage growth will go lower,” he said.
“My sense is in both Canada and the U.S., we’re either at or very close to the end of the hiking cycle.”
Meanwhile on the other side of the border, U.S. employers added 187,000 jobs last month, fewer than the 200,000 that economists had expected, as the higher interest rates continued to weigh on the economy, according to data released Friday.
But the unemployment rate dipped to 3.5 per cent in a sign that the job market remains resilient.
“The pace of employment growth in the U.S. is continuing to slow,” said Archibald.
“Ultimately, these are good signs for what the Federal Reserve is trying to do. They’re raising rates and hoping to slow down employment growth and wage growth.”
In New York, the Dow Jones industrial average was down 150.27 points at 35,065.62. The S&P 500 index was down 23.86 points at 4,478.03, while the Nasdaq composite was down 50.48 points at 13,909.24.
The Canadian dollar traded for 74.88 cents US compared with 74.90 cents US on Thursday.
The September crude oil contract was up US$1.27 cents at US$82.82 per barrel and the September natural gas contract was up a penny at US$2.58 per mmBTU.
The December gold contract was up US$7.30 at US$1,976.10 an ounce and the September copper contract was down three cents at US$3.87 a pound.