Stocks volatile, traders balance Syrian worries with Fed stimulus concerns

TORONTO – Stocks were volatile Friday morning amid nervousness about possible military intervention in the Syrian civil war and speculation about what the Federal Reserve might do about a key stimulus program in the wake of the latest employment data.

The S&P/TSX composite index slipped 14.4 points to 12,830.66 and the Canadian dollar surged more than a full US cent.

The loonie found some support from a Canadian jobs report, which beat expectations, jumping 1.1 cents to 96.28 cents US as Statistics Canada reported that the economy created 59,000 positions last month.

But the growth was mainly for part-time employment as the unemployment rate fell to 7.1 per cent in August from 7.2 per cent the previous month.

The consensus had called for the Canadian economy to have created about 20,000 jobs in August.

The Canadian currency was also lifted by an American dollar that backed off after the U.S. Labor Department reported jobs growth of 169,000 last month, narrowly missing expectations of about 175,000 jobs. The U.S. jobless rate was 7.3 per cent, down from 7.4 per cent.

U.S. indexes were slightly higher late-morning after giving up early, solid gains in the wake of comments from Russian President Vladimir Putin, who told a news conference at the end of the G20 summit in St. Petersburg that his country would continue to “assist” Syria even if the Mideast country is attacked.

The Dow Jones industrials gained 27.65 points to 14,965.13, the Nasdaq rose 8.19 points to 3,666.98 and the S&P 500 index was up 5.36 points to 1,660.44.

President Barack Obama says he will address Americans about Syria on Tuesday while he seeks public support and congressional authority for military action against the regime of Syrian President Bashar Assad as punishment for a chemical attack against civilians in suburban Damascus last month.

Syrian has cast a shadow over trading ever since that chemical attack Aug. 21 but some analysts think sentiment could well improve after it is known just what the U.S. will decide to do.

“At the end of the day, when it’s resolved it will be more of a relief than anything,” said Chris King, portfolio manager at Morgan, Meighen and Associates.

“Remember, when they actually went into the Big One in Iraq (in 2003), a couple of days beforehand markets turned around markedly and this was even before they crossed into the country.”

The U.S. labour data was a mild disappointment as the consensus had called for the American economy to have cranked out about 175,000 jobs in August.

The Fed has indicated it could start winding up its US$85 billion of bond purchases as early as this month if the economy shows sufficient strength. The prospect of the Fed tapering those asset purchases has unnerved some investors as the stimulus has kept rates low and channelled lots of money into equity markets around the globe.

Tech stocks led declines with BlackBerry (TSX:BB) down 18 cents to $11.42 after three days of strong gains, partly fuelled by reports that the smartphone maker wants to launch an auction process for its assets sooner rather than later.

Industrials were also weak with Canadian Pacific Railway (TSX:CP) down $1.89 to $125.72.

Commodity prices were higher and December copper rose three cents to US$3.25 a pound. The base metals group rose 0.75 per cent and Teck Resources (TSX:TCK.B) advanced 50 cents to C$28.13.

The gold sector rose 0.4 per cent as bullion prices advanced after the release of the jobs data with the December contract up $11.50 to US$1,384.50 an ounce. Goldcorp Inc. (TSX:G) improved by 12 cents to C$30.60.

The energy sector was up 0.3 per cent, with the October crude contract on the New York Mercantile Exchange ahead $1.57 to US$109.94 a barrel. Suncor Energy (TSX:SU) fell 50 cents to C$36.76.

European bourses recovered from early lows with London’s FTSE 100 index and Frankfurt’s DAX up 0.25 per cent and the Paris CAC 40 up 0.78 per cent.