Toronto posts small loss on energy weakness

TORONTO — Losses in the energy sector weighed Canada’s main stock index down Friday, while U.S. markets were mixed, pulled lower by tech.

The S&P/TSX composite index closed down 91.18 points at 20515.24.

In New York, the Dow Jones industrial average was up 129.84 points at 33826.69. The S&P 500 index was down 11.32 points at 4079.09,while the Nasdaq composite was down 68.56 points at 11787.27.

Tech was the main downward driver on the markets in the U.S., while in Canada the resource-heavy TSX was affected by a drop in energy stocks, said Brian Madden, chief investment officer with First Avenue Investment Counsel.

The TSX’s energy index was down 3.49 per cent Friday, with some of the biggest energy companies on the index helping weigh it down.

Friday’s weakness was a continuation of a pullback that began a day earlier, said Madden, as some of the optimism investors had in central banks potentially cutting rates by the end of the year was squeezed out by a string of hotterthan-expected economic data.

After inflation, jobs and retail sales all showed the economy is proving tougher than expected to slow down, Thursday’s producer price data came in higher than expected, helping cement that outlook, Madden said.

“Tremors rippled through the market when that PPI number [came out] yesterday,” he said.

“What’s inflationary to a producer ultimately gets passed along in wholesale pricing and eventually becomes inflation to the consumer.”

Central bank officials in both Canada and the U.S. have made it clear that if the economic data supports it, they will continue to hike interest rates, even though Canada’s central bank recently signalled it’s pausing to let the effects of hikes work their way through the market.

Investors had been pricing in up to two cuts by the end of the year, but those expectations have since waned considerably. However, some of the strong economic data is also fuelling cautious optimism that a recession might not be necessary to cool inflation.

The Canadian dollar traded for 74.15 cents US compared with 74.41 cents US on Thursday.

The April crude oil contract was down $2.19 at $76.55 per US barrel, and the March natural gas contract was down 11 cents at $2.28 US per mmBTU.

The April gold contract was down $1.60 US at $1,850.20 US an ounce, and the March copper contract was down almost three cents at $4.11 US a pound.

TransAlta buys into hydro energy storage project

CALGARY — TransAlta Corp. is to acquire a 50 per cent interest in an early-stage pumped hydro energy storage development in southwest Alberta.

The Calgary company said Montem Resources Limited owns the Tent Mountain Renewable Energy Complex that the two companies will jointly manage, with TransAlta acting as project developer.

Under the deal, TransAlta will pay Montem about $8 million when the deal closes, with additional payments of up to $17 million contingent on the achievement of development and commercial milestones. Pumped energy projects involve moving water uphill to a reservoir when energy demand is low, or when energy can be supplied by wind turbines or solar panels. When there’s a demand for energy, the water is released, going downhill to spin turbines that create electricity.

The deal is subject to closing conditions, including approval from Montem shareholders, but is expected to close next month.