TSX wraps up week in red amid listless commodity prices, weak retail figures

TORONTO – The Toronto stock market closed solidly in the red Friday amid listless commodity prices and a weak report on retail sales.

The S&P/TSX composite index was down 40.34 points at 13,433.49 after an otherwise solid performance over the week that saw strong advances in three of the four previous trading sessions.

The Canadian dollar also weakened, losing 0.27 of a U.S. cent to 74.93 cents U.S.

On commodity markets, the January contract for benchmark crude oil was up 18 cents at US$41.90 a barrel, while December natural gas plunged 13 cents to US$2.14 per mmBtu.

December gold gave back $1.60 to US$1,076.30 an ounce, while December copper shed two cents to US$2.05 a pound.

In New York, indexes completed one of their best weeks of the year as traders took heart from strong earnings reports from a number of retailers and a generally favourable view of where the U.S. Federal Reserve is going on interest rate hikes.

The Dow Jones industrials was up 91.06 points at 17,823.81, while the broader S&P 500 added 7.93 points to 2,089.17 and the Nasdaq gained 31.28 points to 5,104.92.

Off-price retailer Ross Stores (Nasdaq:ROST) led the way higher, gaining 10 per cent after reporting results that were far better than analysts expected. Meanwhile, Nike (NYSE:NKE) jumped more than five per cent after announcing a dividend increase, a stock buyback and a stock split.

Retail stocks took a beating earlier this after weak reports from Macy’s and Nordstrom caused investors to worry that the holiday shopping season would be a bust. But those fears are fading as shoppers looking for discounts turn to lower-priced retailers like TJ Maxx and Ross Stores.

The retail news was less impressive north of the border, with Statistics Canada reporting retail sales fell 0.5 per cent in September to $43.3 billion, with the numbers down in eight of 11 subsectors.

Patrick Blais, managing director and senior portfolio manager at Manulife Asset Management, said the results were probably not unexpected “just given basically the impact of low commodity prices and low growth are having on the Canadian consumer.”

“It’s been a surprise, to be honest, that the consumer has been this resilient to date. But I think we’re finally starting to feel the impact of lower energy prices.”

Friday’s strong showing in New York boosted U.S. indexes to one of their best showings of the year, with the Dow up almost 500 points and back in positive territory for the year and the S&P 500 posting its best gain in more than a year.

Blais said traders have been concerned about rising rates in the face of challenges to corporate profitability and revenue in the current low-growth environment.

But the message now is “fairly clear” that the pace and size of Fed increases will be measured, he said.