Canadian and U.S. stocks racked up broad-based losses Thursday amid mounting evidence that U.S. hiring has slowed down.
The Toronto Stock Exchange’s S&P/TSX composite index was down 75.12 points to 15,078.00 in a decline that saw nearly all sectors finish in the red.
In New York, the Dow Jones industrial average dropped 158.13 points to 21,320.04, the S&P 500 index shed 22.79 points to 2,409.75 and the Nasdaq composite index fell 61.40 points to 6,089.46.
The losses came as payroll processor ADP reported that private U.S. businesses added 158,000 jobs last month, which was fewer than analysts expected.
“What we’re seeing is this general erosion in sentiment,” said Andrew Pyle, a senior wealth adviser at Scotia Wealth Management. “Some of that has to do with the weaker-than-expected payroll numbers we saw in the States this morning.”
Going into the summer, Pyle added, the fundamentals that have been behind the impressive movements of U.S. stock markets are now starting to fade.
“Without proof that we’re going to see an acceleration in U.S. growth and global growth, investors are having a hard time justifying current levels of the market. And that’s why we’re seeing this general pullback.”
In currencies, the Canadian dollar was trading at an average price of US77.24¢, up 0.21 of a U.S. cent.
Pyle pegged the loonie’s recent rally to a switch in market sentiment with respect to the Bank of Canada, which next Wednesday will make its next interest rate announcement. There have been growing expectations of a rate hike, which would be the first such increase in nearly seven years.
“That’s what’s really underneath the strength of the Canadian dollar now,” he said. “I think at this point it’s probably getting close to its top.”
Gold, which tends to do well when the U.S. dollar is under pressure, was also up. The August gold contract advanced $1.60 to US$1,223.30 an ounce.
On the corporate front, Air Canada shares were at their highest in more than 10 years on Thursday after the country’s largest airline said analyst forecasts had significantly underestimated one of its earnings benchmarks.
Shares in the Montreal-based airline advanced $1.86, or 10.73%, to close at $19.20. The stock surged after Air Canada said its EBITDAR (earnings before interest, taxes, depreciation, amortization, impairment and aircraft rent) will be better than the $475 million average forecast by analysts for the three months ended June 30.
Elsewhere in commodities, the August crude contract was up US39¢ to US$45.52 per barrel while the August natural gas contract added US5¢ to US$2.89 per mmBTU. The September copper contract was ahead US2¢ at US$2.66 a pound.