2 stock market indexes post record highs, loonie drops nearly a cent

TORONTO – Two North American stock indexes reached record highs Friday on the back of strong U.S. jobs data, while the TSX surged despite major lob losses in Canada.

The U.S. Labor Department said employers added 255,000 jobs in July, numbers that outperformed expectations and helped boost New York markets.

“Everyone’s buying. It’s a risk-on day today,” said Cavan Yie, a senior equity analyst at Manulife Asset Management.

The S&P 500 composite index beat a record-high reached last month, closing at 2,182.87 Friday after advancing 18.62 points.

Meanwhile, the Nasdaq composite edged out a record set more than a year ago, rising 54.87 points to close at 5,221.12.

The Dow Jones industrial average also experienced a sizable gain, advancing 191.48 points to 18,543.5.

In Canada, data released Friday wasn’t nearly as rosy.

Statistic Canada’s labour force survey said the market lost 31,200 net jobs in July, the biggest one-month drop in full-time work in nearly five years.

Another negative report showed Canada’s trade deficit with the world reached a record $3.6 billion in June.

“What you have there is strength in the U.S., weakness in Canada, and therefore U.S. dollar strength versus the loonie,” said Yie.

Canada’s dollar fell dramatically Friday morning. At one point in the day, it plunged more than a cent before finishing at 75.96 cents US — a drop of 0.83 of a U.S. cent from Thursday’s close.

That weakness in the loonie boosted the Toronto Stock Exchange as it benefited companies — like Magna International (TSX:MG) — that generate a lot of their earnings outside Canada, said Yie.

Magna, which Friday reported positive earnings for its second quarter, also earns a large amount beyond Canada’s borders, Yie added. The company’s stock was among the top five gainers in the composite index, up 5.44 per cent.

The S&P/TSX gained 119.99 points to 14,648.77.

Canadian equities also received a boost from an increased chance of stimulus measures — in the form of a Bank of Canada key interest rate cut — later this year, said Yie.

The strength in the U.S. dollar, meanwhile, pushed down commodities like oil and gold.

The September crude contract fell 13 cents to US$41.80 per barrel, while gold lost $23.00 to US$1,344.40.

“Generally gold goes in the other direction,” of the U.S. dollar, said Yie, adding it’s a similar story with oil.

Elsewhere in commodities, September natural gas was down 6.2 cents at US$2.77 per mmBTU and September copper contracts fell two cents to US$2.154 a pound.

Follow @AleksSagan on Twitter.