“I’m Drove Off Me Head!” -Newfoundland Expression
Stocks Ahead On Strong U.S. Employment Data
The Toronto stock market closed with a modest gain Friday even as a rebound in American job creation boosted confidence in the U.S. economy. The S&P/TSX composite index gained 29.14 points to 14,789.78 after the U.S. Labor Department reported that the American economy created 248,000 jobs last month, which handily beat expectations of about 215,000. The U.S. jobless rate also ticked down 0.2 of a point to 5.9 per cent, the lowest level since July 2008. August job creation was revised upward to 180,000 from 142,000. Toronto gains were held back by lower resource stocks as the strong U.S. dollar continued to punish commodity prices. Gold miners fell as bullion closed under $1,200 (U.S.) – its lowest close since February 2010. U.S. indexes registered solid gains with the Dow Jones industrials ahead 208.64 points to 17,009.69, the Nasdaq gained 45.42 points to 4,475.62 and the S&P 500 index climbed 21.73 points to 1,967.9. A higher U.S. dollar pressures commodities because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals which are dollar-denominated. Losses were severe on the TSX this week because the Toronto market is heavily weighted by the resource sector. It fell 237 points or 1.6 per cent.
Federal Deficit To Be Smaller Than Earlier Projected
Prime Minister Stephen Harper says last year’s federal deficit will be more than $10 billion smaller than forecast, but he’s refusing to predict the rapidly improving bottom line will mean balanced books this fiscal year. Harper dropped the new, $5.2 billion deficit figure for 2013-14 — down from the $16.6 billion shortfall projected in last February’s federal budget — during a presentation to a business audience last week in Brampton, Ont. Harper insisted there won’t be a surplus until the 2015-16 election year. “The government has no plan or no intention to move this year into a surplus,” Harper said.
Downplaying the Conservative government’s fiscal position may be more about politics than bookkeeping. Economists and budget watchers, including the independent Parliamentary Budget Office, had calculated Ottawa may already be en route to a surplus this fiscal year, which ends next March 31, before the prime minister’s announcement further improved the bottom line. A surplus would trigger a series of 2011 Conservative election promises that were contingent on balanced books, including a pricey and controversial plan to allow income splitting for tax purposes by couples with children under 18. Doubling the annual Tax Free Savings Account maximum to $10,000, doubling the children’s fitness tax credit and implementing a new adult fitness tax credit were also Conservative pledges tied to a surplus.
Market Update As Of October 3 2014
The TSX closed at 14790, down -237 points or -1.58% over the past week. YTD the TSX is up 8.57%.
The DOW closed at 17010, down -103 points or -0.60% over the past week. YTD the DOW is up 2.61%.
The S&P closed at 1968, down -15 points or -0.76% over the past week. YTD the S&P is up 6.49%.
The Nasdaq closed at 4476, -36 points or -0.80% over the past week. YTD the Nasdaq is up 7.16%.
Gold closed at 1195, down -23.00 points or -1.89% over the past week. YTD gold is down -0.75%.
Oil closed at 87.94, down -3.98 points or -4.33% over the past week. YTD oil is down -10.82%.
The USD/CAD closed at 1.125678, up 0.0102 points or 0.92% over the past week. YTD the USD/CAD is up 5.88%.
Sources: Bloomberg; advisor.ca; Investment Executive.