TSX finishes flat as Canadian employment data disappoints

Investing.com - Canada’s main stock exchange closed minimally lower on Friday, as investors parsed through fresh domestic labor market figures.

By the 4:00 ET close, the S&P/TSX 60 index dropped less than a point, or 0.04%.

The S&P/TSX composite index dipped by 0.01% on Friday, following a Thursday decline of 0.6% to end at 27,761.27.

Disappointing earnings reports from Canadian Tire (TSX:CTCa) Corporation and Restaurants Brands dented sentiment, as did weak returns from insurer Manulife Financial (TSX:MFC).

These results presented a more muddled picture of quarterly returns for big-name Canadian firms, particularly after e-commerce group Shopify posted a better-than-anticipated third-quarter revenue forecasts. Shares in Shopify, which had soared earlier in the week on its upbeat outlook, handed back some of those gains, finishing Friday down 0.8%.

A disappointing jobs report seemed to dent sentiment slightly, but unemployment stayed lower than analyst estimates of 7%. Job losses were steeper than any expected, amounting to 41,000, reversing part of June’s solid gains. Around 34,000 job losses were among workers aged 15-24.

In other news, Canada Prime Minister Mark Carney announced military pay raises as the country attempts to reach NATO’s 2% GDP defense spend goal. The raises are expected to cost around C$2 billion per-year. 

U.S. stocks gain

U.S. stock indexes enjoyed solid gains on Friday as investors digested Trump’s new selection to temporarily fill a vacancy on the Fed’s Board of Governors and assessed an ebbing stream of corporate earnings.

By the 4:00 ET close, the Dow rose 207.5 points, or 0.5%, the S&P 500 jumped 49.5 points, or 0.8%, and the Nasdaq won the day up 207.3% or 1%.

The main averages on Wall Street ended in mixed fashion on Thursday following a choppy session, but finished with gains on the week, with the S&P 500 up 2.4% and the Dow Jones Industrial Average finishing with a 1.4% advance. The NASDAQ Composite delivered a 3.9% climb.

Fed rate cut, Chair successor in focus

The Trump administration’s tariffs took effect from Thursday, imposing import duties as high as 50% on regional economies.

Several countries have thrashed out trade deals with the U.S., including the European Union, reducing their tariff levels, but investors remained on edge over the economic impact of the duties.

A rise in weekly jobless claims on Thursday added to signs of a further cooling in the labor market, especially after last week’s disappointing jobs report.

These readings have furthered bets that the Federal Reserve will cut interest rates in September.

U.S. President Donald Trump has repeatedly called on the central bank to cut interest rates, and announced on Thursday that his top economic adviser, Stephen Miran, will be his pick to take an empty governor seat at the Fed, replacing Adriana Kugler abruptly stepped down from the role as a Fed governor last week.

If confirmed by Senate lawmakers, Miran would have the ability to vote on upcoming interest rate decisions. Notably, Miran has been a consistent supporter of Trump, and has particularly argued that sweeping U.S. tariffs will not massively drive up inflation domestically and the costs of the levies will instead fall mostly on overseas suppliers.

Trump has said Miran will serve in the role temporarily, but hinted that it could be extended.

"We will continue to search for a permanent replacement," Trump said in a social media post. Crucially, that person could be the one who eventually replaces Powell after his term at the head of the Fed ends next year.

The Wall Street Journal reported Friday that the short list for next Fed Chair has added former St. Louis Fed President James Bullard and economis Marc Sumerlin. Other reported candidates include National Economic Council director Kevin Hassett, Fed governor Christopher Waller, and former Fed governor Kevin Warsh.

Solid quarterly earnings

With more than two-thirds of the benchmark S&P 500 having reported their latest quarterly results, the number of those firms whose earnings have topped estimates is one of the highest in recent history, according to analysts at HSBC.

Roughly 80% of reports from constituents in the benchmark index have beat analysts’ profit estimates, with renewed optimism over the applications of artificial intelligence helping paper over concerns over an economic outlook clouded over by sweeping U.S. tariffs.

The S&P 500 is now on track for 10% per-share income growth in the second quarter, almost double initial Wall Street estimates, the HSBC analysts said in a note.

Additionally, Pinterest (NYSE:PINS) stock plummeted by over 10% in Friday’s trade, as analysts flagged that the social media group’s second-quarter sales in the U.S. and Canada trailed its closest rivals.

Expedia (NASDAQ:EXPE) stock jumped 4% on Friday after the travel booking website’s second-quarter earnings and revenue beat expectations.

Gold futures surge

Spot gold prices moved lower, while gold futures rose, as the spread between the two widened after the U.S. reportedly slapped import tariffs on one-kilo gold bars. As evening came on, spot gold gained minimally. 

At 5:30 ET, spot gold gained 0.05% to $3,398.08 an ounce, while COMEX gold futures for December rose 0.13% to $3,458.20/oz.

The U.S. Customs Border Protection agency said one-kilo and 100-ounce gold bars should be classified under a customs code that could open it up to duties, the Financial Times reported, citing a ruling letter dated July 31.

The CBP decision largely contrasts earlier expectations that the import of gold bars would be exempt from Trump’s sweeping tariffs. One-kilo bars are the most common form traded on the COMEX, the world’s biggest gold futures market, with a bulk of them coming from Switzerland.

Crude suffers weekly losses

Oil prices dropped, closing with weekly losses on concerns U.S. tariffs will hit global economic activity, reducing the demand for crude.

At 5:30 ET, Brent futures dropped 0.4% to $66.14 a barrel, and U.S. West Texas Intermediate crude futures lowered 0.8% to $63.39 a barrel.

Both benchmarks affirmed weekly losses between 4% and 6%, which would be their steepest weekly losses since late-June.

Higher U.S. tariffs against a host of trade partners went into effect on Thursday, and have raised concerns of a long-term hit to global demand.

Oil prices were already reeling from the OPEC+ group’s decision last weekend to fully unwind its largest tranche of output cuts in September, months ahead of target.