Canada’s main stock index continued its rise on Friday, hitting a more than one-month high.
The Toronto Stock Exchange’s S&P/TSX composite index unofficially finished up 35.69 points, or 0.24 per cent, at 14,939.18.
Nine of the index’s 11 major sectors were higher, led by a 3-per-cent jump in health care stocks. Aurora Cannabis Inc. increased 7.5 per cent and Aphria Inc. rose 5.4 per cent. Canopy Growth Corp. increased 1.9 per cent.
Leading the index were Cogeco Communications Inc., up 7.5 per cent, Parex Resources Inc., up 3.9 per cent, and BRP Inc., higher by 2.7 per cent.
Lagging shares were Nexgen Energy Ltd., down 5.0 per cent, Seven Generations Energy Ltd., down 4.9 per cent, and New Gold Inc., lower by 4.7 per cent.
The Canadian dollar weakened against its U.S. counterpart on Friday as oil prices fell, but the loonie still advanced for a second consecutive week after the Bank of Canada said the challenges facing the economy were temporary.
“Oil is interesting; super volatile fourth quarter, nice rebound thus far this year. It is still the hot factor,” said Greg Anderson, global head of foreign exchange strategy in New York. “The CAD move (today) is almost tick for tick.”
The three-month correlation between the Canadian dollar and oil has climbed to about 90 per cent, according to Refinitiv Eikon data, indicating the currency and the commodity move mostly in the same direction. For some months in 2018 the correlation was negative.
The Canadian dollar was trading 0.2 per cent lower at 1.3265 to the greenback, or 75.39 U.S. cents.
Wall Street ended little changed on Friday as energy shares dropped and investors looked ahead to earnings season, which will kick off next week with Citigroup, JPMorgan and other big banks.
The Dow Jones Industrial Average fell 5.97 points, or 0.02 per cent, to 23,995.95, the S&P 500 lost 0.38 points, or 0.01 per cent, to 2,596.26 and the Nasdaq Composite dropped 14.59 points, or 0.21 per cent, to 6,971.48.
Companies across the country are gearing up to report how much profit they made in the last three months of 2018, and expectations are for a fifth straight quarter of growth topping 10 per cent.
Worries have been rising about how much of a slowdown will hit corporate profits in 2019, after last year’s numbers got a big one-time boost from lower tax rates.
While GM gave its encouraging forecast Friday, other big-name companies have recently offered a more discouraging picture of revenue trends due to slowing growth in China and elsewhere.
That’s why Baird’s Delwiche and other analysts see this upcoming earnings reporting season, which kicks off in earnest next week, as the next potential trigger for more volatility in the market. Delwiche said he’s particularly interested in hearing how optimistic CEOs are in the economy and their own sales forecasts in conference calls following their earnings reports.
“We’ve seen some retrenchment in business confidence,” Delwiche said. “Is it a blip or evidence that those animal spirits that we saw are starting to dissipate?”
The S&P 500 has been clawing back gains since running to the edge of what traders call a “bear market,” when it dropped 19.8 per cent between setting a record in September and a low on Christmas Eve. Stocks have climbed on soothing words from the Federal Reserve about the future path of interest rates, plus hopes that the U.S.-China trade dispute may ease. That’s helped to at least paper over worries about slowing growth for corporate earnings and the possibility of a looming recession.
Talks between American and Chinese negotiators may have ended without significant breakthroughs, but traders are choosing to focus on the positives. The fact that talks lasted a day longer than planned, conciliatory statements from both sides and the possibility of higher-level talks in the near future are driving gains in Europe and Asia. In December, U.S. President Donald Trump and Chinese leader Xi Jinping agreed to a 90-day tariffs cease-fire, for negotiators to soothe tensions that have unsettled trade.
In Asia, Japan’s Nikkei 225 index jumped 1 per cent, the Kospi in South Korea rose 0.6 per cent and the Hang Seng in Hong Kong gained 0.5 per cent. In Europe, France’s CAC 40 dropped 0.5 per cent, and Germany’s DAX lost 0.3 per cent. The FTSE 100 in London fell 0.4 per cent.
Gold rose 0.2 per cent to $1,289.50 per ounce, silver edged up 0.1 per cent to $15.66 per ounce and copper rose 0.9 per cent to $2.66 per pound.
Oil prices fell nearly 2 per cent on Friday as investors worried about a global economic slowdown, snapping a nine-day winning streak spurred by U.S.-China trade hopes, but clung to some gains from that rally to end the week higher.
Brent crude futures dropped $1.2 to settle at $60.48 a barrel, a 1.95-per-cent loss. U.S. West Texas Intermediate (WTI) crude futures were down $1 to settle at $51.59 a barrel, or 1.9 per cent.
Still, both benchmarks saw their second week of gains, with Brent rising about 6 per cent and WTI up about 7.6 per cent.
The global crude benchmark on Thursday posted its first consecutive nine-day rally since September 2007. WTI, which also hit its ninth straight day of gains, beat a 2010 record.
Rising expectations that an all-out trade war between Washington and Beijing might be averted supported markets earlier in the week. Three days of talks between the two economic superpowers concluded on Wednesday with no concrete announcements, but higher-level discussions may convene later this month.
“After a number of days higher, the market is just taking a breather,” said Tony Headrick, an energy market analyst at St. Paul, Minnesota commodity brokerage CHS Hedging LLC.
Market participants remained cautious about a slew of recent economic data that has raised concerns about a global economic slowdown.
Reuters and The Associated Press