Markets in red on Mixed signals
TORON TO • North American markets ended in the red Friday amid a mixed bag of quarterly financial reports and signs that Canada’s private sector added jobs last month even as the overall unemployment rate rose in June.
The S&P/TSX composite index dipped 10.79 points to 12,542.13. The Canadian dollar was up US0.28¢ to US97.14¢.
On Wall Street, the Dow Jones industrial average dropped 72.81 points to 15,425.51, Nasdaq dipped 9.01 points to 3,660.11, while the S&P 500 pulled back 6.06 points to 1,691.42.
An onslaught of positive economic data from China was not enough to lift the markets, as figures showed that Chinese inflation in July was steady at an annual rate of 2.7% — slightly below an expected modest increase to 2.8%.
Chinese industrial production also rose 9.7% in the year to July, ahead of expectations for a 9% increase and retail sales grew 13.2% in July from a year earlier, slightly slower than June’s growth rate.
Overall, analysts said the figures added weight to the argument that the recent soft patch in the economic powerhouse may have come to an end. However, market reaction was fairly muted, as stocks had rallied already on Thursday after strong Chinese trade numbers.
“I think the market is unwilling to jump in with both feet simply because a number of good numbers came in overnight from China,” said Andrew Pyle, associate director of wealth management for Scotia MacLeod.
“You have a market now that is tired. We’ve been through the second quarter of the U.S. earnings season. You have a market now that is searching for the next reason to stay positive and I think you’re starting to see some of that fatigue.”
Meanwhile, a double-dose of economic news was also released in Canada, potentially indicating the economy wasn’t faring at a pace that some have come to expect.
Statistics Canada reported a net loss of 39,400 jobs last month, with public-sector workers and youth taking the biggest share of the losses. On a positive note, however, Canada’s private-sector employers added 31,400 jobs.
The official unemployment rate is now 7.2%, one-tenth of a point higher than in June.
Canada Mortgage and Housing Corp. also reported total housing starts continued to be relatively stable in July.
The agency estimated there were 17,993 actual starts in July which, extrapolated over 12 months, totals a seasonally adjusted annual rate of 192,853 starts. That was slightly down from June’s adjusted annual rate of 193,797.
On the TSX, BlackBerry Ltd. shares rose more than 7%, or 68¢, to $10.05 on a report that the smartphone-maker’s chief executive and board of directors are warming to the idea of taking the company private.
The reports by Reuters said no decision was imminent and BlackBerry issued a brief statement saying it doesn’t comment on rumours or speculation.
Auto-parts giant Magna International Inc. reported a US$415-million profit and record-high second-quarter sales, which were up 16% from the same time last year and well above analyst estimates.