Toronto stock market slightly lower as U.S. stocks rally

Financial Markets Wall Street

In this Monday, Sept. 26, 2016, photo, traders Kevin Lodewick, left, and Richard Cohen work on the floor of the New York Stock Exchange. U.S. stocks rallied Friday, while Canada’s benchmark stock index was down slightly. (Richard Drew/Associated Press)

Gold and materials stocks pushed the Toronto stock market to a slightly lower close Friday, in spite of fresh data showing that the Canadian economy fared better than expected in July.

Statistics Canada said the economy expanded 0.5 per cent in July as oilsands production came back onboard following a disruption stemming from wildfires that forced the evacuation of Fort McMurray, Alta.

The loonie added 0.19 of a cent to 76.24 cents US.

“The bank of Canada had been talking down July GDP but the numbers have come in to be not as bad as feared, so that’s helped to shore up support for the Canadian dollar,” said Colin Cieszynski, chief marketing strategist at CMC Markets Canada.

Meanwhile, the SP/TSX composite index gave back 28.57 points to 14,725.98, dragged lower by materials stocks, which lost 1.39 per cent, and the gold sector, which was down 1.26 per cent.

Oil prices rose, with the November crude contract up 41 cents to US$48.24 a barrel.

“It’s continuing the trend seen throughout the week where oil has been getting boosted by improving U.S. inventories and the potential for an OPEC production deal in November,” Cieszynski said.

Crude oil has been rallying this week after the Organization of the Petroleum Exporting Countries surprised investors by announcing they had reached a deal on a small cut to production.

Financial stocks lead U.S. markets

In New York, stock markets rallied as investors renewed their hopes that Deutsche Bank and the broader financial system are in better shape than previously believed.

The U.S. Department of Justice wants the German lender to pay $14 billion to settle an investigation into mortgage-backed securities.

Investors had been worried that problems at the bank — one of the largest in Europe — could ripple through the entire financial system.

But a report that said the bank could use a smaller payment to settle the case allayed some of those fears and caused financial stocks in the U.S. and in Europe to climb higher.

“That’s reduced fears that there could be some kind of a banking crisis,” Cieszynski said.

In New York, the Dow Jones industrial average shot up 164.70 points to 18,308.15, the Nasdaq composite gained 42.85 points to 5,312.00 and the SP 500 increased by 17.14 points to 2,168.27.

Banks made the biggest gains Friday on Wall Street as Germany’s largest bank tried to reassure investors about its financial health. Investors hope Deutsche Bank will be able to negotiate down the massive cost of settling a U.S. investigation into mortgage securities.

December gold contracts were down $8.90 at $1,317.10 US per ounce, while the November crude contract rose 41 cents to $48.24 US a barrel.

November natural gas contracts were down five cents to $2.91 US per mmBTU and December copper was up two cents to $2.21 US a pound.

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