North American markets taking 'breather' after five-day rally: analyst

TORONTO – North American markets were relatively flat Friday, ending a five-day rally, even as positive economic news emerged from China and the U.S.

“I think everyone’s just taking a little bit of a breather after a very strong rally that we’ve seen across the world,” said Macan Nia, senior investment strategist at Manulife Investments.

The S&P/TSX composite index fell by 32.10 points to 14,482.42, with all sectors accept financials closing lower, while the loonie lost 0.23 of a U.S. cent to close at 77.30 cents US.

The metals and mining sector of the TSX was the biggest loser, dropping 2.05 per cent, while financials stocks edged up 0.27 per cent.

In New York, the Dow Jones industrial average advanced by 10.14 points to 18,516.55, a new record high, while the S&P 500 gave back 2.01 points to 2,161.74 and the Nasdaq composite slipped by 4.47 points to 5,029.59.

Nia said the market is now more focused on the U.S. earnings season, “which so far has come out above expectations.”

New data out of the U.S. showed that retail sales rose more than expected last month, suggesting that the economy picked up in the second quarter of the year.

The U.S. Commerce Department said retail sales climbed 0.6 per cent in June, the third consecutive month of increases.

“This is a positive because it shows that U.S. consumers are showing signs of resiliency after a slow start to the year,” said Nia. “The U.S. consumer continues to be the main driver of growth for the U.S. economy.”

Meanwhile, a separate report found that U.S. industrial output rose 0.6 per cent in June, following a 0.3 per cent drop in May.

In other positive economic news the Chinese government said the economy expanded by 6.7 per cent in the period from April to June, as increased construction spending by state-owned companies helped to offset weak private sector demand.

That helped boost oil prices, with the August crude contract gaining 27 cents to US$45.95 and the more heavily-traded September contract climbing 23 cents to US$46.65.

“That helps build the story for the demand side and helped energy prices today, despite data coming out of the U.S. from U.S. oil rig counts that saw an increase in rig counts again in the past week,” said Nia.

August natural gas was up three cents to US$2.76 per mmBtu and August gold lost US$4.80 to US$1,327.40 per ounce. September copper was up roughly one cent to US$2.23 per pound.

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