S&P/TSX Compound Slides Into Another Volatile Trading Day; US markets mixed

TORONTO – North American stock markets continued to swirl on Thursday following central bank plans to start raising interest rates in the coming weeks.

Markets received a morning boost after a report that the U.S. economy grew at an annual rate of 6.9% in the fourth quarter, well ahead of expectations, but that energy faltered in l ‘afternoon.

Philip Petursson, chief investment strategist at IG Wealth Management, attributed the market volatility to a correction in valuations rather than something fundamentally wrong with the economies of Canada or the United States.

“It’s a showdown between buyers and sellers. The first half of the day the buyers are gaining, the second half of the day it looks like the sellers are applying a bit more pressure,” he said.

The Canadian market has been cheaper than US markets and hasn’t seen the same downside volatility, with support from energy having been strong year-to-date.

“Gold today is kind of a bit of a nuisance as gold prices are falling, but overall if you look at it, it’s a story of two markets. You have the defensive ones: the consumer staples, communications, utilities versus expensive information technology,” added Petursson.

The S&P/TSX Composite Index closed down 51.78 points at 20,544.11 after climbing as high as nearly 257 points in morning trading.

In New York, the Dow Jones industrial average lost 7.31 points to 34,160.78. The S&P 500 index lost 23.42 points to 4,326.51, while the Nasdaq composite fell 189.34 points to 13,352.78.

Energy, telecommunications and consumer staples led the TSX, with Suncor Energy Inc. rising 2.6% and Rogers Communications Inc. gaining 3.3% on a strong revenue performance last quarter. Grocer Metro Inc. led the consumer sector with an increase of 3.6%.

Energy started the day strong, but weakened as crude oil prices turned negative.

The March crude oil contract fell 74 cents to US$86.61 a barrel after hitting a high of US$88.54. The March natural gas contract rose 24.7 cents to US$4.28 per mmBTU.

“Oil has had a strong run year to date and it’s at a level where I think you can see some of the profit taking coming into the market,” Petursson said of the price drop. .

He dismissed the “chatter” that economic growth will slow as rates rise.

“I just think it’s a function of oil getting to levels that we haven’t seen in years and so you’re seeing traders, speculators, coming in and taking profits.”

The healthcare sector, which includes major cannabis producers, lost 2.9%, with shares of Aurora Cannabis Inc. down 6.1% and Tilray Inc. down 5.6%.

The technology lost 2.2% as Hut 8 Mining Corp. fell 10.9% and Shopify Inc. lost 5.6%.

The prospect of higher interest rates helped the US dollar and hurt gold. US Federal Reserve Chairman Jerome Powell’s statement on Wednesday that rates could rise multiple times without hurting jobs was seen as hawkish.

Materials fell 1.3% as miners lost ground and gold prices fell 2%.

The February gold contract was down US$36.60 at US$1,793.10 an ounce and the March copper contract was down 9.2 cents at US$4.42 an ounce. delivered.

The Canadian dollar was trading at 78.67 cents US against 79.33 cents US on Wednesday.

This report from The Canadian Press was first published on January 27, 2022.



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