Toronto stock market edges down, while U.S. stocks surge higher; loonie down

TMX Group tickers zoom across banners in Toronto on May 10, 2013. (Frank Gunn / THE CANADIAN PRESS)

TORONTO -- Canada's main stock index closed lower Friday despite morning gains as key commodity prices slid, while U.S. markets climbed on positive economic data.

Energy stocks especially weighed on the TSX as crude prices retreated again. The July crude contract closed down US$1.23 at US$65.81 per barrel

"Canada is underperforming the U.S. a little bit, and part of that can be attributed to this welcome pullback in crude oil," said Jamie Robertson, senior portfolio manager at Manulife Asset Management.

The S&P/TSX composite index closed down 17.96 points at 16,043.54 as both oil and gold stocks weighed on the index.

The August gold contract closed down US$5.40 at US$1,299.30 an ounce.

The retreat in oil comes after a steady rise has prompted more supply output from the U.S. and talk of increased production from Russia and OPEC, while gold continues to be less favoured as long as the U.S. dollar stays firm, said Robertson.

Stocks were largely unmoved despite a sharp escalation in trade tensions Thursday after U.S. President Donald Trump announced he was going ahead with tariffs on Canadian steel and aluminum production and the Trudeau government announced $16.6 billion in retaliatory tariffs.

The development didn't make for any major immediate impacts on markets, but will draw out trade uncertainties, said Robertson.

"This is a story that's going to take a while to play out. I think we had hopes of a nice tidy wrap-up of NAFTA, and didn't get it, and these are all just, from our perspective, ongoing negotiating tactics."

The Canadian dollar slid 0.09 of a US cent to average 77.14 cents US, adding to the 0.31 of a US cent it lost Thursday on the tariff news.

Trade tension was already baked-in to the loonie, helping prevent a further slide, said Robertson.

"The loonie's already been under a fair amount of weakness over the last few months, and a lot of that has been on the trade uncertainty."

Overall, this week's trade bluster did little to change the realities on the ground, he said.

"We deal in a world in this particular point where we need to distinguish policy from politics and rhetoric from reality. This is clearly a week where you look back on a Friday and say well what happened, well there was a lot of smoke but not a lot of fire."

The slight retreat in Canadian markets Friday contrasted with strong gains in the U.S. as an excellent jobs report and encouraging construction statistics helped push up the markets, said Robertson.

"There was just not a lot in the jobs number to dislike, it was good job growth, the lowest unemployment rate in 18 years, a nice modest uptick in earnings, it was just a nice solid report and the market is pleased to see that."

Employers added 223,000 jobs last month, more than economists expected and a pickup from April's hiring rate of 159,000. Wages for workers also accelerated, with pay up 2.7 per cent from a year ago. That's a bit faster than April's 2.6 per cent wage growth.

The Dow Jones industrial average closed up 219.37 points at 24,635.21. The S&P 500 index ended up 29.35 points at 2,734.62 and the Nasdaq composite index was up 112.21 points at 7,554.33.

In other commodities, the July natural gas contract ended up one cent at US$2.96 per mmBTU and the July copper contract was up three cents at US$3.10 a pound.

Lululemon Athletica Inc. saw its share price shoot up US$17.14 or 16.32 per cent on the Nasdaq to close at US$122.19 after the Vancouver-based clothing retailer posted better than expected results and revised up its forecast for the year.