Canada’s TSX posts biggest weekly loss since June, C$ rises after jobs gain

By Fergal Smith

TORONTO (Reuters) – Canada’s main stock market index fell on Friday, taking its weekly loss to nearly 3%, as a selloff in high-flying technology shares continued, while the Canadian dollar rallied as domestic jobs data added to evidence of economic recovery.

The Toronto Stock Exchange’s S&P/TSX composite index <.GSPTSE> closed down 1.4% at 16,218.01, after paring earlier losses.

It was the second consecutive day of volatile trading for the TSX and other North American indexes, which had been on a tear since March. For the week, the TSX was down 2.9%, its biggest weekly decline since June.

“The market sell-off has been driven by technology names which have fallen in sympathy with U.S. counterparts and equity markets in general,” said Ben Jang, a portfolio manager at Nicola Wealth. “Profit-taking is not surprising given the recent outsized returns in technology.”

Shares of commerce platform provider Shopify Inc <.SHOP.TO>, Canada’s largest company by market capitalization, fell 4.5%.

The information technology sector <.SPTTTK> was down 3.3%, while the materials group <.GSPTTMT> dropped 1.3% as shares of gold mining companies lost ground.

Gold <.XAU> rose 0.2% to $1,934 an ounce, while the price of oil <CLc1>, one of Canada’s major exports, settled 3.9% lower at $39.77 a barrel as fears of a slow economic recovery from the COVID-19 pandemic compounded worries about weak oil demand.

Canada added 245,800 jobs in August, the fourth consecutive monthly increase though the pace of gains slowed, bringing employment within about a million jobs of pre-pandemic levels, Statistics Canada said.

“Overall, a roughly-as-expected report that supports the recovery story but also highlights the long journey faced by the economy to return to pre-COVID levels of employment and production,” said Ryan Brecht, a senior economist at Action Economics.

The Canadian dollar was trading 0.6% higher at 1.3050 to the greenback, or 76.63 U.S. cents, clawing back much of the prior day’s decline. For the week, the loonie was up 0.4%. On Tuesday it notched a near-eight-month high at 1.2990.

Strategists are growing more bullish on prospects for the Canadian dollar as global economic activity rebounds from the coronavirus crisis, a Reuters poll showed.

Canadian government bond yields were higher across a steeper curve in sympathy with U.S. Treasuries. The 10-year <CA10YT=RR> was up 5.8 basis points at 0.597%, after hitting on Thursday its lowest intraday level in more than three weeks at 0.518%.

Canada’s bond and stock markets will be closed on Monday for the Labour Day holiday. The Bank of Canada is due to make an interest rate announcement on Wednesday.

(Reporting by Fergal Smith; Editing by Jonathan Oatis, Andrea Ricci and Leslie Adler)

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