07/07/2013 06:00 EDT | Updated 09/06/2013 05:12 EDT

Stock markets turn to earning season kickoff as sentiment from jobs data lingers

TORONTO - Stock markets will weigh recent jobs data against an inflow of earnings reports from major U.S. companies starting Monday, as questions persist on the speed of the economic recovery south of the border.

"This is going to be an earnings season where the numbers will probably look decent, but I don't think it's going to be enough to propel equity markets further," said Andrew Pyle, a portfolio manager at ScotiaMcLeod in Peterborough, Ont.

A double dose of jobs data from both the U.S. and Canada on Friday gave investors plenty to digest, with both reports coming in better than expected, but not by enough to generate widespread enthusiasm.

The U.S. Labor Department said American employers added 195,000 jobs in June and hiring was more robust in the two previous months than earlier estimated, suggesting job growth is accelerating.

The Canadian data was less encouraging, with Statistics Canada reporting that the unemployment rate remained unchanged at 7.1 per cent last month, with 400 jobs lost compared to expectations of 12,500 jobs lost.

"There's no trends really emerging either in the overall jobs numbers," said Pyle.

"We tend to see a lot of volatility in the Canadian jobs numbers. They're either great or they're not good. It's really a status quo economy."

The Canadian dollar was near three-year lows on Friday while jobs numbers helped send the greenback soaring.

Philip Petursson, managing director of the portfolio advisory group at Manulife Asset Management said the jobs data on both sides of the border will likely "set the tone for the rest of the summer."

The latest round of earnings reports will likely contribute to providing a further sense of direction. Earnings season is widely expected to be positive, but not enough to drive momentum for a pickup in the pace of the U.S. economic recovery.

On the calendar next week are earnings from U.S. heavyweights like Alcoa, JP Morgan and Wells Fargo.

In Canada, retailers Alimentation Couche-Tard (TSX:ATD.B) and Jean Coutu Group Inc. (TSX:PJC.A) report on Tuesday, while Corus Entertainment Inc. (TSX:CJR.B) issues its results on Thursday.

International developments will be on the radar as Egypt faces further uncertainty after the ouster of its president Mohammed Morsi on Wednesday. Protesters were fired on by the country's military late last week, and while Egypt is not an oil-producer, it controls the Suez Canal, one of the world's busiest shipping lanes for crude oil.

In Portugal, Prime Minister Pedro Passos Coelho is working on reaching a common ground with his coalition partner Paulo Portas, who leads the Popular Party. The men have been in talks over austerity measures for the nation following Portas' resignation as Portuguese foreign minister last week.

Investors have watched developments in Portugal with concern — the interest rate Portugal pays on its debt has spiked sharply amid fears that the resignations could lead to the government falling apart and make it harder for the country to pay what it owes.

The Bank of Canada will release its summer business outlook survey on Monday, which will give a reflective view of the late May and early June period when it was compiled, which is when stock markets began to stumble on anticipation of Fed proceeding with its tapering plan.

Canadian housing starts for May will be released Tuesday and provide the latest glimpse on whether the housing market is starting to plateau.

Also on the schedule is the release of the Federal Open Market Committee minutes from last month, due on Wednesday.