S&P/TSX composite climbs despite big declines by tech and health care sectors
S&P/TSX composite climbs despite big declines by tech and health care sectors
This July 30, 2019, file photo shows an introduction page for Snapchat shown in a mobile phone displayed at Apple's App Store in Chicago. (AP Photo/Amr Alfiky, File)
TORONTO -
Canada's main stock index rose after investors returned from a long weekend even as the technology sector was whipsawed by soured sentiment resulting from profit warnings by social media company Snap Inc.
The S&P/TSX composite index closed up 88.59 points to 20,286.20 a day after U.S. markets rallied from Friday's steep losses.
In New York, the Dow Jones industrial average was up 48.38 points at 31,928.62. But the S&P 500 index lost 32.27 points at 3,941.48, while the Nasdaq composite was down 270.82 points or 2.4 per cent at 11,264.45.
Monday's rally in the U.S. was partially offset by Tuesday losses for the two tech-focused markets, said Anish Chopra, managing director with Portfolio Management Corp.
“Because Canada was closed yesterday, we're getting the combination of two days worth of movement. So even though yesterday was up in the U.S. and down today, Canada is just up very, very modestly,” he said in an interview.
The Toronto market was largely driven higher by commodity sectors and financials which continued to gain ground amid elevated inflation and rising interest rates.
Energy climbed 2.5 per cent despite lower crude oil prices as Crescent Point Energy Corp. was up 6.2 per cent.
“I think investors believe that it's safe to hide any energy gains on tough days because the price of oil may stay at these high levels for a while,” said Chopra.
The July crude contract was down 52 cents at US$109.77 per barrel and the July natural gas contract was nearly one cent at US$8.84 per mmBTU.
The Canadian dollar traded for 77.97 cents US compared with 77.95 cents US on Friday.
Materials rose 1.4 per cent on increased bullion prices with Oceanagold Corp. gaining 7.6 per cent.
The June gold contract was up US$17.60 at US$1,865.40 an ounce and the July copper contract was down 4.1 cents at US$4.31 a pound.
Canadian banks moved up a day before the release of their second quarter results.
Banks earn income from the spread between the rate they lend at and the cost to borrow. With interest rates going up worldwide, banks are the beneficiaries of an environment of increasing spreads, said Chopra.
“But there is some concern given the potential for a slowing environment that margin expansion from rising interest rates could be offset by increased expenses and loan loss reserves and lower capital market activity than there was a year ago.”
Health care was the biggest laggard Tuesday, losing 7.5 per cent as cannabis shares slumped after the governor of Delaware vetoed a bill to legalize cannabis in the state, setting up a political battle with the legislature.
Chopra said the question for investors is does state opposition become an issue across the United States.
Shares of Canopy Growth Corp. plunged 14.5 per cent while Aurora Cannabis Inc. and Cronos Group Inc. were down 12.3 and 11.1 per cent, respectively.
Technology slumped 4.3 per cent in Canada to follow the lead of the U.S. sector after the profit warning from Snap caused its shares to plunge 43 per cent, with ripple effects to Alphabet, Meta, and Twitter as investors were concerned about digital advertising revenue.
Shares of Shopify Inc. lost 10.7 per cent while Hut 8 Mining Corp. was down 10 per cent.
After benefiting from enhanced sales during COVID-19 lockdowns, tech companies are adjusting to a normalizing environment with people going out instead of being stuck at home.
“Investors have to recalibrate what the sales and earnings of these COVID beneficiary stocks are actually going to be going forward and it takes some time for that recalibration to happen. It'll take a few quarters before investors get a better picture as people go back to work and stay at home less,” Chopra added.
Also pressuring U.S. market was retailer Abercrombie & Fitch Co. posting a quarterly loss and reducing its annual sales and margin outlook. Markets were partially upended last week by weak guidance from Walmart Inc. and Target Corporation.
This report by The Canadian Press was first published May 24, 2022.
YOUR FINANCES
TD 'significantly' downgrades home sale, price forecasts
A new report from TD says Canadian home sales could fall by nearly one-quarter on average this year and remain low into 2023.
Gas prices see long weekend drop in parts of Canada, but analysts say relief not likely to last
The Canada Day long weekend saw gas prices plummet in parts of the country, but the relief at the pumps may not stay for very long, analysts say. The decreases come after crude oil prices slid in June following the U.S. Federal Reserve's interest rate hikes, sparking fears of a recession.
Stocks are down, but here's why experts say you shouldn't panic
As stocks continue to slump, it can be easy to let your emotions take over if you've got money invested in the market. But experts agree that there's no need to panic if you're invested in the right type of portfolio with the right level of risk.
My landlord is increasing my rent – what should I do?
With increasing rent prices likely to be the reality for many Canadian tenants, some may be wondering how to navigate rising costs, or whether any course of action can be taken, if any. Legal experts across the country share their advice on how to handle a rent hike.
New clean fuel regulations to raise gas prices, affect low-income Canadians most
New federal regulations to force down the greenhouse gas emissions from gasoline and diesel will cost Canadians up to 13 cents more per litre at the pump by 2030.
OPINION
OPINION | Should you still be saving money with inflation at 7.7 per cent?
With inflation reaching a 40-year high, many Canadians have been left in a state of worry. Not only about the rising prices of consumer goods, but whether or not they should continue to save money. It’s not such a simple question, and it depends greatly on your circumstances, contributor Christopher Liew explains in an exclusive column for CTVNews.ca.
Almost half of Canadians are doing worse financially than the previous year: survey
As inflation rates soar to the highest they've been in Canada in nearly forty years, nearly half of Canadians say that right now, they're doing worse financially than they were at this time last year.
Here's how to save on your next grocery order, according to Canadian couponers
As Canada’s inflation soars, two ‘extreme couponers’ offer their advice on how to save at the grocery store.