Canada’s main stock index ended lower on Friday amid broad-based losses, while U.S. stocks also ended lower despite gains the previous day.
The S&P/TSX Composite Index fell 66.37 points to close at 21,875.79, led by declines in energy and industrial stocks.
The Canadian market was feeling some pressure due to lackluster signs of growth.
Statistics Canada said Friday that real gross domestic product (GDP) increased 0.3 per cent in April, with early figures for May showing growth slowing to 0.1 per cent for the month.
Hadiza Jattau, global fixed-income portfolio manager at Mackenzie Investments, said the pace of gains earlier this year had slowed as consumers pulled back on purchases.
“When you look at the details, consumption has really been hit. Canadian consumers are really feeling the pain of these high tax rates over the last two years,” she said.
“So I would say the stock price is being affected by that to some extent.”
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In New York, the Dow Jones Industrial Average fell 45.20 points to 39,118.86, the S&P 500 lost 22.39 points to 5,460.48 and the Nasdaq Composite lost 126.08 points to 17,732.60.
North American markets initially rose in the morning on positive inflation figures.
U.S. consumer prices rose 2.6% year-on-year in May, according to the latest personal consumption expenditures index, the Federal Reserve’s main gauge, signaling a continued easing from April’s 2.7% increase and well below the 7.1% peak two years ago.
The Canadian dollar was trading at 73.06 cents per U.S. dollar, compared with 73.05 cents on Thursday.
Jatau said the Canadian dollar remained relatively flat as Canada’s GDP data had little impact on interest rate cut expectations.
“I don’t think it necessarily makes it more likely, but at least it doesn’t make it significantly less likely.”
The widening trajectory of the economic gap between Canada and the United States will put pressure on the Canadian dollar going forward, she said.
“We expect the Canadian dollar to weaken significantly from here. We expect the Canadian dollar to reflect the growth environment, particularly versus the U.S.”
Jatau said he was hoping to see a market reaction to the US dollar after Thursday’s presidential debate, but the reaction was fairly muted.
“I don’t think the market has priced in the election outcome at all yet.”
August crude oil futures fell 20 cents to $81.54 per barrel, while August natural gas futures fell 8 cents to $2.60 per mmBTU.
August gold futures rose $3 to $2,339.60 an ounce, while September copper futures rose 4 cents to $4.39 a pound.
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