North American stock markets wrap up brutal quarter and first half of 2022
Allan Small said the first half of 2022 has proven to be the worst run of his 25-year investment career.
Canada's main stock index concluded its weakest quarter since before the pandemic while U.S. markets endured their worst six-months runs in decades on fears that rising interest rates will throw the economy into recession.
“As we hit the mid-point of the year, when you look back I think the first part of the year will be known for just a bloodbath in the markets,” the senior investment adviser at IA Private Wealth said in an interview.
The S&P/TSX composite index closed down 217.28 points to 18,861.36 to end the quarter off nearly 14 per cent for the biggest decrease since December 2019. The TSX is closed Friday for Canada Day while U.S. markets will be closed Monday for Independence Day.
In New York, the Dow Jones industrial average was down 253.88 points at 30,775.43. The S&P 500 index was down 33.45 points at 3,785.38, while the Nasdaq composite was down 149.15 points at 11,028.74.
The TSX is down 11 per cent so far this year, while the Dow is down 15 per cent, the S&P 500 is off 20.6 per cent for the worst six months in 50 years and Nasdaq fell a record 29.5 per cent.
“I don't remember a year that started off the six months this poorly,” said Small.
Soaring inflation has been stoked by Russia's invasion of Ukraine while supply chain bottlenecks have been accentuated by China's COVID-19 lockdowns.
While markets endured steep declines in the past due to COVID-19 and the financial crisis, they were always followed by people buying the dip. This time, many investors remain on the sidelines after getting hammered and unsure about when markets will bottom out.
Economic data out of the U.S. on Thursday said core inflation numbers, the Fed's preferred inflation measure, rose 4.7 per cent in May. That's 0.2 of a per cent lower than April but still around 40-year highs.
In Canada, economic growth slowed in April to 0.3 per cent, while a preliminary estimate for May suggests it likely contracted 0.2 per cent. The U.S. previously said its economy slipped 1.6 per cent in the first quarter.
A negative number in the second quarter will mean the U.S. economy is technically in recession. But Small said many people think the economy is already there and that Canada is either in recession or about to go into one.
Small said he wouldn't be surprised to see markets rise during a recession in anticipation of things getting better, with inflation moving down after peaking.
Real estate and utilities were the lone sectors in positive territory Thursday in a broad-based slump with six of nine sectors falling by more than one per cent.
Health care led the declines, losing 4.1 per cent with Canopy Growth Corp. plunging 18.5 per cent after the pot producer announced a convertible notes exchange.
Materials lost 3.6 per cent on a drop in metals prices, particularly copper.
The August gold contract was down US$10.20 at US$1,807.30 an ounce and the September copper contract was down 7.1 cents at US$3.71 a pound.
“Whenever you have fear of a recession, those types of metals which are used to build homes and build things, the fear is that you're not going to need to use as much of these building materials,” Small said.
Energy lost 1.7 per cent on lower prices with crude oil dropping as Advantage Oil & Gas Ltd. shares were down six per cent.
The August crude contract was down US$4.02 at US$105.76 per barrel and the August natural gas contract was down US$1.07 at US$5.42 per mmBTU.
The Canadian dollar traded for 77.60 cents US compared with 77.65 cents US on Wednesday.
Shopify Inc. decreased 5.6 per cent to push technology lower while Laurentian Bank fell 2.5 per cent to lead a drop in the heavyweight financial sector.
Small is hoping for a better second half of the year after central banks conclude their aggressive interest rate hikes to tame soaring inflation.
“I don't know if we're going to make back enough to get us in the green for the year, but I'm hopeful that we'll see a positive second half and we'll make back some of the losses.”
This report by The Canadian Press was first published June 30, 2022.
With inflation rising at its fastest pace in nearly 40 years, the cost of everything from food to gas has skyrocketed. Canadians across the country are feeling squeezed, but big families with multiple children are at times shouldering much of the higher costs — and changing demographics and consumer patterns have left some of them more exposed to inflation than in previous generations.
Is Canada's 'historic' housing correction affecting your plans to buy or sell? CTVNews.ca wants to hear from you
Following a series of interest rate hikes, Canada's housing market is now facing a 'historic' correction. CTVNews.ca wants to hear from Canadians looking to buy or sell homes in a changing market landscape.
For millennial and gen Z Canadians, owning a home in this real estate market might seem like a pipe dream. In an exclusive column for CTVNews,ca personal finance contributor Christopher Liew offers some strategies to consider if you can’t afford the housing market yet.
The Canadian Association for Retired Persons is raising alarms about the increase in old age security only being made eligible for those 75 and above.
The rising cost of living is exacerbating the challenge for many Canadians living on fixed disability income to pay for food and housing.
The savings accounts of Canadians have sprung a leak. As inflation tops eight per cent, anyone with money in the bank is seeing their savings drip away at the fastest rate on record because interest rates for savings accounts, still largely languishing at around one per cent, haven't kept up.
With inflation at a nearly 40-year high, Canadians are feeling the financial strain. In a six-part series this summer, people at different stages of their lives detail where they're being hit the hardest.
While there are many perks to owning a property, renting your home comes with benefits as well. So, how should you decide whether to buy or rent your home? Personal finance columnist Christopher Liew breaks it down in an exclusive column for CTVNews.ca.