S&P/TSX composite ticks lower Friday on energy weakness, U.S. markets mixed

By The Canadian Press on July 14, 2023.

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TORONTO – Canada’s main stock indexticked lower Friday led by losses in the energy sector, while U.S. markets were mixed.

The S&P/TSX composite index was down 15.57 points at 20,262.07.

In New York, the Dow Jones industrial average was up 113.89 points at 34,509.03.The S&P 500 index was down 4.62 points at 4,505.42, while the Nasdaq composite was down 24.87 points at 14,113.70.

Markets came out of the gates fairly strong after several large U.S. banks and other companies reported encouraging results to kick off earnings season, said Ian Chong, associate portfolio manager for First Avenue Investment Counsel Inc.

“The banks were definitely front and centre, JPMorgan, Wells Fargo and Citi,” said Chong. “They all reported strong results, beating consensus estimates, particularly on net interest income.”

However, markets started to dip lower in the mid-morning as more details on the earnings tempered investor optimism, said Chong, such as concerns that consumer spending could be set to slow amid increasing household debt, and that some consumers are falling behind on credit card payments.

“That was a little bit of a mixed bag,” he said, though he noted it was still more positive than negative.

“All things considered, it has been a fairly strong start to the Q2 earnings reporting period,” said Chong, but “the economic data continues to rule the day.”

Also weighing on investors was the latest University of Michigan consumer confidence survey, which saw consumer sentiment rising, while inflation expectations also ticked slightly higher.

The Federal Reserve watches inflation expectations closely, said Chong, and doesn’t want to see higher expectations ingrained into longer-term outlooks.

“What that kind of told me was that if consumer sentiment is still relatively strong, and inflation expectations are starting to creep up, the Fed will likely keep hiking,” he said — and while another hike is already priced in, the Fed is also likely to keep rates higher for longer.

The theme of “˜higher for longer’ was felt across the border too, with higher manufacturing sales and some strength in the housing market, said Chong.

“The Bank of Canada could very well move again,” he said.

The TSX was also dragged lower by energy stocks as the price of oil was down more than two per cent.

The Canadian dollar traded for 75.86 cents UScompared with 76.17 on Thursday.

The August crude oil contract was down US$1.47 at US$75.42 per barreland the August natural gas contract was down a penny at US$2.54 per mmBTU.

The August gold contract was up 60 cents at US$1,964.40 an ounce and the September copper contract was down less than a cent at US$3.93 a pound.