Stock markets higher on surprisingly strong Canadian, U.S. job creation figures

TORONTO – The Toronto stock market was modestly higher Friday amid much better than expected job creation data in Canada and the United States last month.

The S&P/TSX composite index was off the best levels of the morning but still up 18.54 points to 12,169.67 while the TSX Venture Exchange gave back 1.43 points to 1,185.27.

Statistics Canada reported that the economy added 59,000 jobs last month, while the jobless rate dropped by 0.2 of a point to 7.2 per cent.

Economists had expected a smaller increase of about 10,000 jobs last month, following a minimal 1,800 gain in October.

The Canadian dollar rose 0.24 of a cent to 101.14 cents US following the release of the report.

The news was equally surprising in the U.S., where economists had expected a lacklustre report with job creation impacted by superstorm Sandy.

But the U.S. Labour Department said the economy cranked out 146,000 jobs in November while the jobless rate decreased 0.2 of a point to 7.7 per cent. On a less positive note, job gains for the previous two months were ratcheted down by 49,000.

U.S. indexes rose following the the employment news as the Dow Jones industrials ran ahead 55.6 points to 13,129.64, the Nasdaq dipped 1.03 points to 2,988.23 and the S&P 500 index edged 2.64 points higher to 1,416.58.

Traders also took in a strong earnings report from Bank of Nova Scotia (TSX:BNS). Net income jumped 31 per cent from a year ago to $1.5 billion, while the bank’s adjusted earnings came in at $1.21 a share, three cents better than estimates. Its shares added a three cents to US$55.59 as the bank narrowly missed revenue estimates.

The TSX closed lower Thursday despite strong earnings reports from three of the other big banks. TD Bank (TSX:TD) and CIBC (TSX:CM) lost ground as adjusted earnings beat expectations but those banks also missed on revenue forecasts while National Bank (TSX:NA) matched forecasts.

The gold sector led TSX advancers Friday, up about 0.9 per cent while February bullion gained 30 cents to US$1,702.10 an ounce. Goldcorp Inc. (TSX:G) climbed 40 cents to C$36.88 while Barrick Gold Corp. (TSX:ABX) was 33 cents higher to $33.45.

Other commodities registered slight gains in the wake of the U.S. jobs data.

The energy sector was flat as oil prices shook off early losses after demand concerns helped push oil down for the previous three sessions, with the January crude contract on the New York Mercantile Exchange up a penny to US$86.27 a barrel. Imperial Oil (TSX:IMO) was down 31 cents to C$43.23.

Telecoms led decliners with Telus Corp. (TSX:T) down 63 cents to $64.27.

The base metals sector was slightly lower with March copper ahead two cents at US$3.66 a pound. Sherritt International (TSX:S) gained eight cents to C$5.09 while Lundin Mining (TSX:LUN) gave back 23 cents to $5.02.

Attention will continue to be directed at what steps U.S. politicians are taking to avoid falling over the “fiscal cliff” at the end of December, when substantial tax increases and spending cuts will be triggered. The worry is that the moves would immediately cut into economic growth, likely sending the U.S. into recession and taking other world economies along with it.

President Barack Obama wants to raise $1.6 trillion in revenue over the next 10 years, partly by letting decade-old tax cuts on the country’s highest earners expire at the end of the year.

He would continue those Bush-era tax cuts for everyone except individuals earning more than $200,000 and couples making above $250,000.

House Speaker John Boehner has offered $800 billion in new revenues to be raised by reducing or eliminating unspecified tax breaks on upper-income people.

In other corporate news, the $6.1-billion takeover of Viterra Inc. (TSX:VT) by Swiss commodity trader Glencore International has been approved by China’s ministry of commerce. It’s the final regulatory step required for Glencore to buy Viterra, a Canadian company with major grain handling operations in Australia. As a result of the final approval, Glencore expects the effective closing date of the deal to be Dec. 17. Viterra shares were up 37 cents to $16.22.

European bourses were mixed after Germany’s central bank sharply cut its 2013 economic growth forecast to 0.4 per cent as the European debt crisis continues to weigh on the region’s economies.

The Bundesbank cut its outlook for gross domestic product growth next year from the 1.6 per cent it had predicted in June. It also lowered its forecast for 2012 to 0.7 per cent from one per cent.

Also, Germany’s Economy Ministry said that industrial production was down 2.6 per cent in October compared with the previous month, a far worse performance than the flat reading economists had been expecting.

London’s FTSE 100 index climbed 0.15 per cent, Frankfurt’s DAX was off 0.19 per cent and the Paris CAC 40 was up 0.21 per cent.

Earlier in Asia, Japan’s Nikkei 225 index ended the day down 0.2 per cent, South Korea’s Kospi added 0.4 per cent and Australia’s S&P/ASX 200 rose 0.9 per cent, while Hong Kong’s Hang Seng closed down 0.3 per cent.

Mainland China’s Shanghai Composite Index climbed 1.6 per cent while the smaller Shenzhen Composite Index jumped 2.1 per cent.