A sign board displaying Toronto Stock Exchange (TSX) stock information is seen in Toronto June 23, 2014. (© Mark Blinch / Reuters)
Canada’s main stock index opened lower on Friday as energy stocks hit by cooling oil prices led the market lower, while heavily weighted bank stocks added to the declines, even as the economy pumped out more jobs than expected.
The S&P/TSX composite index was down 92.92 points, or 0.62 per cent, at 14,985.08.
However, the Canadian dollar rose half a cent after the solid jobs report to 77.54 cents (U.S.).
Canada’s unemployment rate is down to 6.5 per cent after the economy churned out a better-than-expected 45,000 jobs in June.
Most of those gains, however, were in part-time positions. Still, over the course of 12 months, Canada has created 351,000 jobs, most of them full-time.
And notably, Statistics Canada said Friday, employment gains in the second quarter, of 103,000, mark the strongest quarterly showing since 2010. The jobless rate dipped one notch, from 6.6 per cent in May.
U.S. stocks opened higher on Friday after job growth surged more than expected in June, underscoring labour market strength that could keep the Federal Reserve on course for a third interest rate hike this year despite benign inflation.
The Dow Jones Industrial Average rose 54.64 points, or 0.26 per cent, to 21,374.68.
The S&P 500 gained 6.62 points, or 0.27 per cent, to 2,416.37.
The Nasdaq Composite added 23.95 points, or 0.39 per cent, to 6,113.41.
Nonfarm payrolls increased by 222,000 jobs last month, data from the Labor Department showed, beating economists’ expectations for a 179,000 gain.
Average hourly earnings increased 0.2 per cent in June after gaining 0.1 percent in May.
While the unemployment rate rose to 4.4 per cent from a 16-year low of 4.3 percent, that was because more people were looking for work, a sign of confidence in the labor market.
“The topline number is quite strong. We saw positive revisions to the previous month and the average for this year is consistent with the average employment per month from last year,” said Michael Arone, chief investment strategist at State Street Global Advisors.
Investors are focused on wage growth and whether spending by consumers will be strong enough to back the Fed’s rate hike plans.
Odds of a rate hike at the Fed’s December meeting stood at 50.6 per cent, according to the CME Group’s FedWatch tool.
Policymakers have taken opposing views on inflation after it retreated below the central bank’s 2 per cent target in May, creating uncertainty over the future path of rate hikes.
Adding to the jitters are bets that the world’s major central banks are moving closer to unwinding their ultra-loose monetary policies.
Shares of banks including Bank of America, JPMorgan , Citigroup and Goldman Sachs rose about 0.5 per cent in early trading.
Oil fell more than 2 per cent after data showed U.S. production rose last week just as OPEC exports hit a 2017 high. Oil prices are down more than 16 per cent this year, adding to low inflation concerns.
U.S. stocks ended sharply lower on Thursday due to a steep fall in technology stocks and a disappointing private sector hiring report. Rising tensions in the Korean peninsula also added to the pressure.
Investors will also be watching for developments from the G20 summit, which is underway in Germany, with focus on President Donald Trump’s first meeting with Russian President Vladimir Putin.
Tesla rose 0.3 per cent after the luxury electric carmaker won an Australian contract to install the world’s biggest grid-scale battery. Tesla’s shares have fallen about 15 per cent this week following the company’s lower-than-expected deliveries.