TSX gains as investors weigh earnings, economic concerns

The S&P/TSX Composite Index managed to end with a gain on Friday after spending most of the day in negative territory as investors digested another barrage of corporate earnings and a jobs report that fueled concerns about a slowing economy.

The index closed up 43.09 points, or 0.22 per cent, to 19.620.13.

Shares of Suncor Energy Inc. closed 0.68 per cent lower at $39.19, despite the release of its second quarter results that beat expectations on operating profit.

The company also stated it reached an agreement to sell assets in Norway in a $410-million deal and will look to sell its entire UK portfolio.

TC Energy Corp. announced a strategic partnership with Mexico’s state-owned utility Comisión Federal de Electricidad (CFE) to build natural gas infrastructure in Mexico.

In a press release Thursday, the company said one of the joint projects included developing and constructing the TGNH Southeast Gateway Pipeline for US$4.5 billion.

To help fund the deal, TC Energy is raising $1.8 billion in a bought-deal offering of 28.4 million common shares at a price of $63.50 apiece.

TC Energy shares fell 3.17 per cent to $63.55 on Friday.

SECOND MONTH OF JOB LOSSES

Statistics Canada reported the Canadian economy lost 30,600 jobs in July, marking the second straight month of job losses.

The median estimates among economists tracked by Bloomberg was for a gain of 15,000 positions.

Eric Theoret, global macro strategist at Manulife Investment Management, said this jobs data is “eye-catching for not only market but policy makers as well.”

The weakness in the Canadian labor market is concerning: Strategist

Eric Theoret, global macro strategist at Manulife Investment Management, joins BNN Bloomberg to discuss the latest jobs data out of Canada and the US Theoret says Canadian economy is showing signs of shrinking; meanwhile, the US economic pace remains strong. He adds solid data out of the US could prompt the Fed to continue its aggressive tightening cycle.

“Ultimately, the way we’re looking at the economy is we are expecting a slowdown in growth. We are expecting tighter policy as a result of this higher inflation environment and so really, that moderation is something that we’ve been expecting,” Theoret said in an interview Friday.

“Now, you know, when you look at the sequence of data, labor data are typically lagging and so to see weakness in labor data so soon after the tightening is a bit of a concern, because I don’t think we would have been expected to see it just at this point just yet.”

The Canadian dollar ended at 77.28 cents US, down 0.58 per cent.

Markets in New York were mixed on Friday. The S&P 500 fell 0.16 per cent, the Dow Jones Industrial Average closed 0.23 per cent lower and the tech-heavy Nasdaq was down 0.50 per cent.

The US Labor Department reported the US economy added 528,000 jobs last month, more than double economists’ expectations of 250,000 new positions.

Benchmark West Texas Intermediate fell 0.19 per cent to US$88.37 per barrel. The commodity posted its the biggest decline since April.

Bob Iaccino, co-founder and chief market strategist at Path Trading Partners, said he thinks the price of oil could stand to fall all the way to US$68 per barrel.

US$68 oil is a realistic target based on the recent supply and demand falloff: Bob Iaccino

Bob Iaccino, co-founder and chief market strategist at Path Trading Partners, joins BNN Bloomberg to talk on the markets and the latest job data in North America. Iaccino says that his biggest concern is inflation, not a recession, and that an upcoming 75bps rate hike from the US Fed could be a walk.

He flagged concerns with “an artificial floor put in by the depletion of the US Strategic Petroleum Reserve” and the threat of hurricane season in the US

Despite having a short position on oil, Iaccino is still optimistic about major energy producers in Canada and the US

“[Energy companies] have a lot of cash on hand right now, they’ve had repeated record profits and they’ll be able to weather storms that they weren’t able to weather in say 2014 or 2015, so they’re in a much better position, ” said Iaccino.

Here’s a roundup of some other earnings-related stories:

  • Canopy Growth Corp. swung to a loss in its first quarter as it recorded a non-cash impairment of $1.73 billion, representing all of the goodwill value of its operations. On a positive note, Canopy said its revenue from its BioSteel business jumped 169 per cent.
  • Telus reported net income soared 45 per cent in the second quarter, as it added a record 247,000 net new customers.

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