Latest News
The Canadian Press - ONLINE EDITION
Stocks could be in for added lift as markets put best face on dismal jobs data
RICHARD DREW / AP PHOTO Enlarge Image
A board on the floor of the New York Stock Exchange shows the Dow Jones Industrial Average as it crosses 10,000 Wednesday, Oct. 14, 2009.
TORONTO - Stock markets could be in for some further gains this week after a better feeling about the U.S. economy put investors in the mood to claw back a good sized chunk of the losses from the previous week.
The TSX ran ahead 3.11 per cent last week despite disappointing employment data for Canada and the U.S. on Friday, a turnaround from the previous week when investors were consumed by worry about the U.S. economic revival.
The headline numbers for the Canadian and U.S. employment data were terrible.
More than 43,000 jobs were lost in Canada last month, a huge miss from economists' consensus which forecast the addition of 10,000 jobs. And the unemployment rate jumped two-tenths of a point to 8.6 per cent.
And in the U.S., the Labour Department reported that 190,000 jobs were lost last month, against estimates of about 175,000, while the jobless rate came in at 10.2 per cent, up sharply from 9.8 per cent.
But investors found positive news in the American data, including the fact that the last two jobless reports weren't as bad as first appeared.
"This number is always subject to big revisions," observed John Johnston, chief strategist, the Harbour Group at RBC Dominion Securities.
"And revisions in the prior two months was favourable by 91,000. That tells me the number today probably is going to get revised over the next couple of months to show a smaller decline."
Johnston said the trend in employment numbers is moving towards improvement - a slower rate of job losses heading towards a positive reading sometime early in the New Year.
But he added that although recent reports - including data late last month showing U.S. third quarter growth of about 3.5 per cent - indicate a move into a sustained expansion, it doesn't mean there won't be some uneven patches that feel like another dip is on the way.
On a positive note, he also observed that the jobs data further reinforces the view that the U.S. Federal Reserve is not going to be raising rates any time soon.
"So I think this is a constructive development, because this means market yields are going to come down and hence, it's going to provide more support in the future for the economy so this number suggests a U-shaped recovery, which is the right way to think about it," said Johnston.
At the same time, North American markets have had a tough time holding onto gains since mid-October - last week's loss was the second weekly loss in a row and left the TSX with its first monthly loss since February.
"We've had a great run and the intermediate indicators are starting to get overbought," said Johnston.
"So we're heading into potentially a reasonable sized pullback within the context of a cyclical bull market. I think that at some point it's reasonable to take a 10 to 20 per cent pullback, which is a bit bigger than the consensus is thinking."
Johnson noted that there is still a huge amount of money on the sidelines and while "some of that could come in, it's also saying that people are still cautious."
And while Johnston believes a step back is coming, that doesn't mean we can't see further advances this week.
"We sold off through much of October and it now looks like there is a bit of a trading rally taking hold which is measured in days or a couple of weeks," he said.
"But this is not one to chase is the way I would view it. When we look at months, it suggests it's a time to be very cautious."
- Rate this

-
-
We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.
You can also register and/or login to the site and join the conversation by leaving a comment.
Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.
There are no comments at the moment. Be the first to post a comment below.
Post Your Comment
The Winnipeg Free Press does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.
-
Flu Fight
News about the world's battle against the H1N1 flu pandemic
-
Winnipeg Blue Bomber Report
All of the latest on the Big Blue
-
Buy the Bowl
If dogs can paint, you can fight world hunger
-
Follow the Way!
Join United Way on its journey toward lasting change and better lives.
-
Winnipeg road closures
Check if your commute is affected
-
Editor's Bulletin
Sign up for daily bulletins
-
Blogs to Watch
We pick our favourite local blogs for you to follow
-
Breaking News Widget
Create and embed a Winnipeg Free Press breaking news widget on your site or blog
- Back to Top
- Return to Latest News
Advertisement
Most Popular
- $50-million lottery ticket bought in Manitoba
- No more jail time for tot's death
- Tire problem factor in plane's belly landing
- Pair busted for drugs at South Beach hotel
- Bombers draw inspiration from movie 300
- How would a $50 million lotto pot be best distributed?
- It all comes down to Bishop
- Tears and fears
- Your weekend weather
- Random acts of kindness
- $50-million lottery ticket bought in Manitoba
- Tories 'represent renewal' says McFadyen
- No more jail time for tot's death
- Tears and fears
- Big prize or bust for Blue and Kelly
- New police station moves a step closer
- Bombers draw inspiration from movie 300
- Hike in water, sewer rates tabled to fund upgrade
- US military base shooting suspect told 'something wrong with you,' after others saw trouble
- Unnecessary visits discouraged
- His turn to confront mortality
- Tears and fears
- Tire problem factor in plane's belly landing
- Voice of a nation
- Whenever I hear women complaining about the rat race, I think about the career I didn't have
- $50-million lottery ticket bought in Manitoba
- US man accused of killing ex-son-in-law in New Jersey to tell jurors he was too fat to kill
- Manitoba couple gets juices flowing
- We're done for! We're done for!
- Chuck's speech to the Bombers
Ads by Google



PREVIOUS

0 Comments