Band Fergal Smith

TORONTO, July 8 (Reuters) – Canada’s main stock index fell on Friday but was still up for the week as investors weighed the prospects of a global recession and domestic jobs data supported expectations of an outsized rate hike of interest next week by the Bank of Canada.

The Toronto Stock Exchange S&P/TSX Composite Index .GSPTSE ended down 40.31 points, or 0.2%, at 19,022.86.

For the week, the index rose 0.9%.

“The TSX made a modest advance this week, but given the recent volatility, we’re going to accept that,” said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth. “I think investors can expect continued volatility over the summer months as fears of a potential recession come and go.”

Recession concerns have rocked equity markets around the world in recent months as central banks take aggressive action to control inflation.

Expectations rose that the Bank of Canada would raise interest rates by three-quarters of a percentage point next week after data showed Canada’s unemployment rate fell to a new record low of 4.9% in June and wages had accelerated sharply.

The Federal Reserve has already increased that increase in the current tightening cycle and may do so again after Friday’s data showed stronger-than-expected U.S. job growth.

“The (Canadian) data suggests an extremely tight labor market and appears to reinforce traders’ perception that the Bank of Canada will follow in the Fed’s footsteps,” Picardo said.

The energy sector gave up some of the previous day’s strong gains, falling 1.1% even as crude oil stood 2% higher at $104.79 a barrel.

The materials group, which includes precious and base metal miners and fertilizer companies, lost 1.3%.

Among the sectors that gained ground was consumer discretionary. It ended up 0.8%, helped by a 4.2% gain for Aritzia Inc. ATZ.TO as the fashion retailer beat quarterly profit estimates.

(Reporting by Fergal Smith; Additional reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Jonathan Oatis)

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