TSX Ends Lower On Weak Jobs Data -- Canadian Commentary

(RTTNews) - Canadian stocks snapped a two-day gain to end lower on Friday, tracking declining global equity markets and some disappointing employment data that showed jobs in Canada to have declined for a second month.

The market struggled to find direction Friday, as did global equity markets in general at the end of a volatile week of trading. Oil prices struggled to hold on to gains made over the last two days but still ended lower, while gold ticked up moderately.

While employment in the U.S. grew more than expected in December, investors were disappointed by a slowdown in wage growth. With employment rising more than expected, the unemployment rate also dipped to its lowest level in well over six years.

Despite the continued job growth in the U.S., data showed average hourly employee earnings fell by $0.05 to $24.57 in December. The annual rate of average hourly earnings growth slowed to 1.7 percent in December, the slowest rate of growth since October of 2012.

Analysts believe the slowdown in wage growth could have the Fed rethink on an early hike in rates.

Chicago Federal Reserve President Charles Evans on Friday said the central bank should be patient on raising interest rates due to concerns about low inflation and declining U.S. wages. Evans, in a CNBC interview, said that he would not start raising rates from zero before 2016.

The benchmark S&P/TSX Composite Index closed Friday at 14,384.92, down 72.80 points or 0.50 percent. The index scaled an intraday high of 14,496.91 and a low of 14,325.15.

On Thursday, the index closed at 14,457.72 , up 172.72 points or 1.21 percent.

Crude oil ended lower with continued worries of supply glut even as the dollar trended lower against some major currencies. Nonetheless, the losses were capped as oil prices found support with some upbeat employment data that grew more than expected.

The Energy Index gained 0.23 percent, with U.S. crude oil futures for February delivery shedding $0.43 or 0.9 percent to close at $48.36 a barrel on the Nymex Friday.

Among energy stocks, ARC Resources Ltd. (ARX.TO) edged down 0.72 percent, Canadian Natural Resources Limited (CNQ.TO) added 0.21 percent, Suncor Energy Inc. (SU.TO) added 1.03 percent, and Canadian Oil Sands Limited (COS.TO) climbed 1.89 percent.

Pacific Rubiales Energy Corp. (PRE.TO) dived 7.73 percent, Encana Corp. (ECA.TO) fell 0.19 percent, Crescent Point Energy (CPG.TO) climbed 5.1 percent and Cenovus Energy Inc. (CVE.TO) gathered 0.89 percent.

Gold futures ended higher on Friday, as most global equity markets declined and the dollar trended lower against a basket of major currencies, with a slowdown in wage growth in the U.S. employment report for December in focus.

The Global Gold Index jumped 4.67 percent, with gold for February delivery gained $7.60 or 0.6 percent to settle at $1,216.10 an ounce on the New York Mercantile Exchange Friday.

Among gold stocks, Yamana Gold Inc. (YRI.TO) jumped 5.79 percent, Agnico Eagle Mines Limited (AEM.TO) surged 6.52 percent, and Goldcorp Inc. (G.TO) gathering 5.43 percent.

Eldorado Gold Corp. (ELD.TO) added 4.04 percent, Barrick Gold Corp .(ABX.TO) gained 1.95 percent, and Franco-Nevada Corp. (FNV.TO) gathered 3.26 percent.

The Capped Materials Index gained 1.70 percent, mostly on rising gold stocks, with Potash Corp. of Saskatchewan Inc. (POT.TO) down 1.09 percent.

The heavyweight Financial Index dropped 1.44 percent, as National Bank of Canada (NA.TO) dropped 2.67 percent, Toronto-Dominion Bank (TD.TO) surrendered 1.22 percent, and Bank of Nova Scotia (BNS.TO) fell 1.76 percent.

Royal Bank of Canada (RY.TO) dived 1.71 percent, while Bank of Montreal (BMO.TO) surrendered 1.62 percent. Canadian Imperial Bank of Commerce (CM.TO) fell 1.43 percent.

The Healthcare Index shed 0.76 percent, after having gained over 4 percent yesterday. Valeant Pharmaceuticals International, Inc. (VRX.TO) inched up 0.02 percent, while Catamaran Corp. (CCT.TO) shed 2.64 percent.

The Diversified Metals & Mining Index slipped 0.15 percent, as Teck Resources Limited (TCK.B.TO) shed 0.74 percent, First Quantum Minerals Ltd. (FM.TO) fell 1.57 percent, and Finning International Inc. (FTT.TO) dropped 2.72 percent. Lundin Mining Corp. (LUN.TO) gained 0.92 percent.

The Capped Industrials Index dropped 0.73 percent, with Bombardier Inc. (BBD.B.TO) down 4.60 percent and Air Canada (AC.TO) up 0.98 percent.

The Information Technology Index fell 0.48 percent, with BlackBerry Limited (BB.TO) shedding 2.07 percent. Sierra Wireless (SW.TO) inched up 0.02 percent, while Constellation Software (CSU.TO) dropped 0.64 percent. Descartes Systems Group Inc. (DSG.TO) gained 2.91 percent.

Alterra Power (AXY.TO) gained 1.54 percent, after having announced late Thursday it agreed to sell its Soda Lake facility for $8.5 million.

In economic news, Canadian employment dropped by 4,300 jobs in December, following the loss of nearly 10,700 in November. Economists had expected employment to increase by 15,000 jobs in December. The unemployment rate held steady at 6.6 percent.

Statistics Canada also reported Friday that Canadian building permits tumbled by 13.8 percent in November, to C$6.58 billion. This was the second largest decline in four months. Economists had been calling for a modest gain of 0.5 percent.

In economic news, the U.S. Labor Department said non-farm payroll employment climbed by 252,000 jobs in December compared to economist estimates for an increase of about 245,000 jobs.

The report also showed that employment rose even more than previously estimated in the two previous months. Employment rose by a revised 261,000 jobs in October and 353,000 jobs in November, reflecting a net upward revision of 50,000 jobs.

The stronger than expected job growth helped to push the unemployment rate down to 5.6 percent in December from 5.8 percent in November. Economists expected unemployment rate to dip to 5.7 percent.

Wholesale inventories in the U.S. rose much more than expected in November, a report from the Commerce Department showed Friday, although wholesale sales dropped. The wholesale inventories climbed by 0.8 percent in November after rising by an upwardly revised 0.6 percent in October. Economists expected wholesale inventories to edge up by 0.3 percent following the 0.4 percent increase originally reported for the previous month.

U.K. industrial production dropped by an unexpected 0.1 percent from October, when output decreased 0.3 percent. Economists had forecast industrial output to grow 0.2 percent. The decline was due mainly to a a slump in oil and gas extraction, even as manufacturing rebounded from the prior month.

Meanwhile, visible trade gap in the U.K. dropped to GBP 8.8 billion in November from GBP 9.8 billion in October. It was expected to decrease to GBP 9.5 billion.

U.K. construction output fell 2 percent from October, while economists forecast a 1.2 percent increase. Output was down 1.9 percent in October. The decline in November was due to a drop in all new work and repair and maintenance, data from the Office for National Statistics revealed Friday.

German industrial production and exports declined in November, indicative of a struggle to achieve sustainable recovery. Industrial output in November was down unexpectedly by 0.1 percent from October, the first fall in three months. Economists had forecast a 0.3 percent rise following October's 0.6 percent growth.

China's consumer prices inflation picked up speed in December from the five-year low in the previous month, data from the National Bureau of Statistics showed Friday. Annual consumer prices inflation quickened to 1.5 percent in December from the five-year low of 1.4 percent in November. This matched the expectations of economists.