Canada’s largest stock index ended a down week in the black Friday as gold pushed the loonie and the materials sector higher and oil endured its sixth consecutive week of declining prices.
The January crude contract was unchanged at US$56.68 per barrel Friday but was down almost 6% for the week as it ended an unprecedented 12-day run of falling prices. West Texas Intermediate was down 26% from its peak in early October.
The December natural gas contract was up US23.4¢ at US$4.27 per mmBTU.
While some small energies company moved up, the energy sector on the Toronto Stock Exchange (TSX) was down half a per cent on the day as bigger names weakened with the West Canadian Select closing marginally higher from its low.
“So I think it’s just a question of investors wrapping their head around Canadian energy given the particular challenges that we’re facing with take-away capacity being so constrained,” said Patrick Blais, senior portfolio manager at Manulife Asset Management.
Low Canadian oil prices will force producers to cut production next year which will have a significant economic impact, he added.
“It’s a tough week to get any momentum or traction behind the Canadian market given that a lot of the bullishness surrounding investing in Canada was based on oil fundamentals coming into a healthy position and now that’s basically been thrown out and we’re going to face a tough environment to find investors to step back into Canada given the challenging prospects.”
The S&P/TSX composite index closed up 10.62 points to 15,155.50, but down from 15.274.44 a week ago.
The volatile health-care sector closed off 2% Friday while technology and consumer discretionary rebounded. Materials and telecommunications also closed higher.
The December gold contract was up US$8 at US$1,223 an ounce and the December copper contract was up US5.20¢ at US$2.80 a pound.
“It’s normal to see a bounce back in gold and precious metals, especially given the pressure they’ve been under over the last year,” Blais said in an interview.
The Canadian dollar traded at an average of US76.02¢ compared with an average of US75.75¢ on Thursday.
In New York, the Dow Jones industrial average gained 123.95 points to 25,413.22. The S&P 500 index was up 6.07 points at 2,736.27, while the Nasdaq composite was down 11.16 points at 7,247.87.
The U.S. market got a brief boost after U.S. President Donald Trump was hopeful of a deal with China to resolve their trade dispute, but later retreated.
Earlier, Federal Reserve vice-chairman Richard Clarida suggested that future pace of interest rate hikes may slow.
The central bank’s more dovish tone and hope of a trade deal are very helpful to equity markets, said Blais.
“Those are the two of the big risks that equity markets have been facing and if those can be removed it would definitely provide some positive momentum to stocks.”