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Canadian Stocks Are Off Their Early Highs - Canadian Commentary

The Canadian stock market got off to a positive start Friday, but has since pared its early gains. Rising commodity prices have helped to provide a boost to the gold and energy sectors this morning. However, investors remain a bit gun shy amid signs the Bank of Canada will again rise interest rates in the next few months.

The BoC rattled markets earlier this week by hiking rates for the first time in seven years and signaling more to come.

Markets in Europe are turning in a mixed performance Friday. The markets have been stuck in a sideways pattern throughout the day, but remain on track for a weekly gain on optimism that the Federal Reserve would maintain a gradual path of policy normalization.

Markets in the United States inched higher at the open Friday, but are little changed overall. Investors are sifting through a large number of U.S. economic reports this morning, the results of which proved mixed. Financial stocks Wells Fargo, Citigroup, and JPMorgan Chase have been struggling since the release of their second quarter results.

The benchmark S&P/TSX Composite Index is up 28.92 points or 0.19 percent at 15,163.92.

On Thursday, the index closed down 8.99 points or 0.06 percent, at 15,135.00. The index scaled an intraday high of 15,159.67 and a low of 14,113.06.

The Gold Index is advancing 1.60 percent. Gold prices are rising Friday morning, on track for modest weekly gains amid renewed expectations the Federal Reserve will be very cautious on raising interest rates.

B2Gold (BTO.TO) is gaining 3 percent and Barrick Gold (ABX.TO) is advancing 1.90 percent. Eldorado Gold (ELD.TO) is up 0.33 percent and Kinross Gold (K.TO) is climbing 3.11 percent. IAMGOLD (IMG.TO) is rising 2.20 percent and Yamana Gold (YRI.TO) is adding 2.34 percent. Goldcorp (G.TO) is also increasing 1.95 percent.

The Capped Materials Index is up 1.08 percent. Agnico Eagle Mines (AEM.TO) is climbing 1.46 percent and Franco-Nevada (FNV.TO) is gaining 0.66 percent. Agrium (AGU.TO) is rising 0.95 percent and Potash Corp. of Saskatchewan (POT.TO) is adding 0.77 percent.

The Capped Telecommunication Services Index is up 0.56 percent. Rogers Communications (RCI-B.TO) is gaining 0.86bce percent and BCE (BCE.TO) is rising 0.40 percent. TELUS (T.TO) is also increasing 0.40 percent.

The Energy Index is rising 0.46 percent. Crude oil prices continue to rise Friday, extending strong weekly gains amid expectations that U.S. production will fade.

Suncor Energy (SU.TO) is gaining 0.75 percent and Encana (ECA.TO) is rising 1.28 percent. Crescent Point Energy (CPG.TO) is climbing 0.22 percent and Canadian Natural Resources (CNQ.TO) is adding 0.38 percent. Enbridge (ENB.TO) is advancing 0.31 percent.

The Capped Healthcare Index is higher by 0.44 percent. Valeant Pharmaceuticals International (VRX.TO) is climbing 1.32 percent and Concordia International (CXR.TO) is climbing 5.61 percent.

The Capped Industrials Index is up 0.07 percent. Canadian National Railway (CNR.TO) is higher by 0.01 percent and Canadian Pacific Railway (CP.TO) is rising 0.15 percent. Bombardier (BBD-B.TO) is advancing 0.85 percent and Finning International (FTT.TO) is adding 0.04 percent.

The Capped Information Technology Index is losing 0.31 percent. Constellation Software (CSU.TO) is declining 0.69 percent.

The heavyweight Financial Index is decreasing 0.12 percent. Canadian Imperial Bank of Commerce (CM.TO) is weakening by 0.24 percent and Bank of Montreal (BMO.TO) is surrendering 0.33 percent. Royal Bank of Canada (RY.TO) is falling 0.21 percent and Toronto-Dominion Bank (TD.TO) is down 0.32 percent. Bank of Nova Scotia (BNS.TO) is slipping 0.15 percent.

Manulife Financial (MFC.TO) is down 0.24 percent. The company is exploring a possible initial public offering or spinoff of its Boston-based John Hancock Financial Services Inc. unit, the Wall Street Journal reported, citing people familiar with the plans.

The planned move comes amid ongoing struggles for life insurers with low interest rates that dampen investment profits.

On the economic front, the Eurozone trade surplus increased in May as growth in exports outpaced the rise in imports, data from Eurostat showed Friday. The trade surplus increased to a seasonally adjusted EUR 19.7 billion in May from EUR 18.6 billion in April. Exports grew 2.1 percent from April and imports by 1.6 percent.

A report released by the Commerce Department on Friday showed U.S. retail sales unexpectedly decreased for the second consecutive month in June. The Commerce Department said retail sales fell by 0.2 percent in June after edging down by a revised 0.1 percent in May.

The continued drop in sales surprised economists, who had expected sales to inch up by 0.1 percent compared to the 0.3 percent decrease originally reported for the previous month.

Consumer prices in the U.S. came in unchanged in the month of June, according to a report released by the Labor Department on Friday. The Labor Department said its consumer price index was flat in June after edging down by 0.1 percent in May. Economists had expected consumer prices to inch up by 0.1 percent.

Industrial production in the U.S. increased by slightly more than anticipated in the month of June, the Federal Reserve revealed in a report on Friday. The Fed said industrial production climbed by 0.4 percent in June after inching up by a revised 0.1 percent in May.

Economists had expected production to rise by 0.3 percent compared to the unchanged reading originally reported for the previous month.

With consumer expectations taking a hit, the University of Michigan released a report on Friday showing a notable deterioration in U.S. consumer sentiment in the month of July. The preliminary report said the consumer sentiment index dropped to 93.1 in July from the final June reading of 95.1. Economists had expected the index to edge down to 95.0.

While the Commerce Department released a report on Friday showing a rebound in U.S. business inventories in the month of May, the report also showed a drop in business sales. The report said business inventories rose by 0.3 percent in May after falling by 0.2 percent in April. The increase in inventories matched economist estimates.

In commodities, crude oil futures for August delivery are up 0.55 or 1.19 percent at $46.63 a barrel.

Natural gas for August is up 0.03 or 1.01 percent at $2.991 per million btu.

Gold futures for August are up 12.20 or 1.00 percent at $1,229.50 an ounce.

Silver for September is up 0.289 or 1.84 percent at $15.98 an ounce.

by RTTNews Staff Writer

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