TORONTO — Canada's main stock index ended up for the week despite slipping Friday after a June jobs report reinforced expectations that the central bank will pursue another aggressive interest rate hike next week.
"Today is all about jobs and what that entails," said Allan Small, senior investment adviser at IA Private Wealth.
In Canada, the economy lost 43,000 jobs last month but the unemployment rate fell to a record low of 4.9 per cent. In the U.S., employment continued to be strong and beat expectations with 372,000 jobs created and the unemployment rate remaining at 3.6 per cent.
Small said the jobs reports won't stop central banks from raising rates.
"They might even have a little bit more ammunition on the U.S. side to raise rates. And even in Canada, they're going to go at least 75 points next week, and then we'll see what happens after that," he said in an interview.
Small said it's a situation where bad news is good and positive news is bad. In this case, strong U.S. employment won't cause the Federal Reserve to pull their feet off the pedal from planned aggressive rate hikes.
"It wasn't a number that the Fed will say, 'Oh OK, things are slowing, maybe we won't raise as much.' ... It was a number that they're going to say we could see things are slowing but not enough yet and they're going to probably raise 75 bps."
The S&P/TSX composite index closed down 40.31 points to 19,022.86.
In New York, the Dow Jones industrial average was down 46.40 points at 31,338.15. The S&P 500 index was down 3.24 points at 3,899.38, while the Nasdaq composite was up 13.96 points at 11,635.31.
Energy and materials were among the seven sectors that were lower on the day.
Energy lost 1.1 per cent even as crude oil prices rose, with Crescent Point Energy Corp. and Athabasca Oil Corp. down 3.0 and 2.7 per cent, respectively.
The August crude contract was up US$2.06 at US$104.79 per barrel and the August natural gas contract was down 26.3 cents at US$6.03 per mmBTU.
The Canadian dollar traded for 77.11 cents US compared with 77.01 cents US on Thursday.
Capstone Mining Corp. lost 10.2 per cent and HudBay Minerals Inc. were down 7.6 per cent to push the materials sector lower despite higher bullion prices.
The August gold contract was up US$2.60 at US$1,742.30 an ounce and the September copper contract was down five cents at US$3.52 a pound.
Telecommunications was softer as shares of Rogers Communications Inc. led the sector lower, dropping 1.2 per cent as it suffered a widespread network outage that left many customers without mobile and internet service.
North American stock markets ended the week higher. The TSX increased 0.9 per cent, while U.S. markets were up between 0.8 and 4.6 per cent.
Small said he's hopeful that stock markets will regain a lot of their losses in the coming months.
"I really believe that the U.S. markets and even our market will have a positive second half to the year based on the fact that I think the central banks are going to slow down their interest rate hikes. I don't think they can maintain this pace without taking us into a recession."
This report by The Canadian Press was first published July 8, 2022.
Companies in this story: (TSX:CPG, TSX:ATH, TSX:CS, TSXHBM, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press