S&P/TSX composite falls as commodities, financials struggle
TORONTO — Canada’s main stock index slumped Friday as shares of miners, energy companies and financial firms flagged, while investors eyed bonds and interest rate trends.
The S&P/TSX composite index was down 163.28 points at 18,060.26. In New York, the Dow Jones industrial average was down 469.64 points at 30,932.37, the S&P 500 index was down 18.19 points at 3,811.15, while the Nasdaq composite was up 72.91 points at 13,192.34.
Friday was a day of trend reversal in the financial markets, said Craig Jerusalim, senior portfolio manager of Canadian equities at CIBC Asset Management.
“Technology is a big winner today in Canada, led by Shopify,” said Jerusalim. “And those cyclical companies, like the financials … energy and material stocks have really pulled back today. Gold is dropping pretty hard.”
The April gold contract was down US$46.60 at US$1,728.80 an ounce and the May copper contract was down 17 cents US at US$4.09 a pound. The April crude oil contract was down US$2.03 at US$61.50 per barrel and the April natural gas contract was down less than a penny at $2.77 per mmBTU.
Jerusalim said that as the yield on the benchmark 10-year U.S. Treasury note “paused” its recent growth, cyclical sectors —financials, energy and material stocks — also took a “breather” on Friday.
Financial companies saw shares fall more than one per cent on Friday, while energy stocks were down almost two per cent and materials stocks, including mining companies, dropped more than three per cent.
But Jerusalim said that despite the one-day pullback in some stocks, “for the patient, longer-term investor, there are still a lot of reasons to stay optimistic.”
“We are wrapping up that earnings season, and for the most part, fundamental reporting is driving stock performance,” Jerusalim said.
“We have had a lot of companies exceed expectations, and that’s helped with the confidence. Overall, the companies seem to be performing well and guiding for stronger 2021.”
Jerusalim said there have been some short spurts of volatility in the stock market, pointing out that “the meme stocks, the GameStops and AMCs of the world, seemed to have had another kick at the can this week.”
But Jerusalim said there are also reasons for investors to look forward to a period of global growth potentially coming ahead.
“When you take a step back and you think about the world getting back to getting back to work, and getting past the point of herd immunity and the vaccine rollout, that there’s so much pent-up demand from the consumer to go out and spend,” Jerusalim said.
Health Canada authorized the AstraZeneca vaccine on Friday, and the first half million doses of it will be shipped to Canada next week.
“The expectations are that Canada will hit herd immunity a little bit after the U.S. But typically, what is good for the U.S. is good for Canada, as our largest trading partner,” Jerusalim said of the market sentiment around vaccine news.
“Canada typically does well in that period of global synchronized growth, because of oil and gas and materials — and the cyclical nature of the TSX.”