TORONTO — Canada’s main stock index slipped ever so slightly on lower commodity prices as it capped a record-setting week while the loonie rose on a strong jobs report for March.
The S&P/TSX composite index was down less than one point from the previous day’s record close to reach 19,228.03.
The Toronto market gained 1.25 per cent for the week and 2.8 per cent in April, which historically has been a healthy start to the second quarter.
However, trading activity has been extremely light — in fact, it was the lowest-volume week in Canada since January 2020.
“Clearly there’s … some digesting going on amongst investors and waiting to see the earnings reporting season, which starts with a bang next week in the U.S. with a lot of the large banks,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
Volumes were also low in the U.S. even as the Dow Jones industrial average and S&P 500 reached unprecedented levels and markets rose for a third straight week.
The Dow was up 297.03 points at 33,800.60 and the S&P 500 index increased 31.63 points at 4,128.80. The Nasdaq composite climbed 70.88 points at 13,900.19.
Archibald said he’s cautious when stock markets are moving on low volumes, but he said there have been pretty good returns to start the second quarter in Canada and the U.S.
He said investors are waiting for first-quarter results to determine the ongoing battle between reopening sectors like energy, financials and industrials versus technology and telecommunications.
“Really for the last several weeks, almost on a daily basis, those preferences are kind of going back and forth so it’s unclear to me as to what the market’s preferring at the moment,” he said in an interview.
The Canadian dollar traded for 79.72 cents US compared with 79.50 cents US on Thursday.
It got a boost after Statistics Canada reported that 303,000 jobs were added in March and the unemployment rate fell to 7.5 per cent. The labour market is on track to recoup all the jobs lost a year ago because of COVID-19.
Archibald said it was a healthy report that exceeded expectations since most of the gains were full-time positions.
“That’s obviously got a little fire under the loonie here today,” he said. “The economy is healing and we are getting back to something that is going to look a little bit more normal as we continue to move through 2021.”
A late rally on the TSX helped several sectors to turn positive on the day.
However, energy was the big laggard, losing 1.4 per cent on a drop in crude oil prices as shares of Tourmaline Oil Corp. and Cenovus Energy Inc. decreased three and 2.7 per cent, respectively.
The May crude oil contract was down 28 cents at US$59.32 per barrel and the May natural gas contract was up 0.4 of a cent at nearly US$2.53 per mmBTU.
Oil has struggled to stay above US$60 a barrel since OPEC announced it would gradually increase supply over the next three months. It has also faced pressure from global lockdowns that is putting pressure on demand.
“I still believe as we get into the summer and as vaccinations pick up globally — and hopefully as these lockdowns subside over the next four to six weeks — that the energy price will peek its head back above $60,” said Archibald.
Consumer staples dipped slightly and materials was nearly flat as the price of gold dropped on a rise in bond yields.
The June gold contract was down US$13.40 at US$1,744.80 an ounce and the May copper contract was down 5.5 cents at US$4.04 a pound.
Yields shot up early Friday after the U.S. reported a rise in the Producer Price Index that measures wholesale price inflation.
“It kind of speaks to the idea that there’s some pricing power starting to show up in the U.S. and it also speaks to this idea that inflationary pressures are certainly in some pockets of the market are starting to build a little bit.”