Stock markets in Toronto and New York closed in the red on Friday after another economic report signalled the U.S. economy might be slowing.
“The market is in a bit of a profit-taking mode after a very strong run,” said Lesley Marks, chief investment officer of equities at Mackenzie Investments.
But she said weaker retail sales in the U.S., which came as a surprise, acted as a catalyst for the decline on the markets.
The S&P/TSX composite index was down 29.02 points at 36,730.27.
In New York, the Dow Jones industrial average was down 107.58 points at 53,732.41. The S&P 500 index was down 13.23 points at 7,785.76, while the Nasdaq composite was down 73.86 points at 26,729.16.
Marks said lower retail sales numbers in the U.S. are another indication that the American economy may be softening, which comes a week after a surprisingly weak U.S. jobs report.
“The U.S. economy is the most important economy for the global economy,” Marks said. “It means weakness could find its way to Canada — an important trading partner to the U.S.”
Meanwhile, Canada faces a new round of 50% tariffs from the U.S. on nearly US$20 billion worth of Canadian goods ranging from dairy to down jackets, which is set to take effect Aug. 19.
Unlike most of Trump’s other tariffs, the duties would not exempt goods that comply with the Canada-U.S.-Mexico Agreement, a trade deal widely known as CUSMA.
But Marks said investors don’t seem so concerned. Instead, they are likely anticipating a last-minute deal or an extension on the tariffs deadline from U.S. President Donald Trump.
“You’re seeing the Canadian dollar has actually recovered a little bit. The S&P/TSX is hitting records other than today,” she said. “I think it’s fair to say that investors think that we either get one of those two scenarios.”
The Canadian dollar traded for 72.07 cents US compared with 71.75 cents US on Thursday.
Meanwhile, oil prices climbed on Friday as uncertainty continues about when the war with Iran will allow oil tankers to freely exit the Persian Gulf again.
The September crude oil contract was up US$1.15 at US$82.40 per barrel.
Marks said it’s likely that oil prices will continue to be volatile. “It doesn’t feel like we’re getting close to having a long-standing resolution that will lead to the opening of the Strait of Hormuz.”
The December gold contract was up US$16.90 at US$4,437.30 an ounce.
— With files from The Associated Press