Indian envoy warns of 'big red line,' days after charges laid in Nijjar case
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
North American stock markets plunged midafternoon on geopolitical concerns following a report that the U.S. has approved arms shipments from Baltic NATO members to Ukraine to fend off a Russian incursion.
Stock markets were on track to reverse Wednesday's steep losses with the Nasdaq composite recovering from a technical correction when everything changed around 2:15 p.m.
“That's kind of taken the wind out of the sails of the market,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.
Amid heightened market volatility, geopolitical headlines aren't helping, “particularly given the nervousness” around just the start of the year.
“Clearly war isn't going to be good for anyone. But I think it's just mostly the uncertainty around what this may mean going forward,” he said in an interview.
“Will the U.S. put more sanctions on Russia? What is Russia's response to those potential sanctions? There's just a high level of unknowns around the particular situation at the moment, and so I think that's really just what's kind of spooking the broader market at the moment.”
The S&P/TSX composite index closed down 146.98 points to 21,058.18 after rising as much as about 165 points in earlier trading.
A similar trajectory took place in New York with the Dow Jones industrial average down 313.26 points at 34,715.39 after being up as much as almost 462 points.
The S&P 500 index lost 50.03 points to 4,482.73 for a swing of 119 points, while the Nasdaq composite was down 186.24 points or 1.3 per cent at 14,154.02 after being up as much as 2.1 per cent.
Archibald said market sentiment started the day buoyant on overnight news that China was cutting prime rates in the first easing measure since April 2020. Bond yields also came off a little from Wednesday's elevated levels.
“Both of those things provided a little bit of relief to the growth areas of the market,” he said.
The technology sector, in particular, initially strengthened to propel Nasdaq while Canada's tech sector was helped by early gains from Shopify Inc. and Lightspeed Commerce Inc.
In addition, weekly U.S. jobless claims numbers were at a three-month high because of the Omicron variant, which eased concerns about how hawkish the Federal Reserve will be at its meeting next week.
The afternoon selloff resulted in just two of 11 major sectors ending the day higher on the TSX.
Industrials was only marginally higher as Richelieu Hardware Ltd. shares rose 8.3 per cent following the release of strong results, while utilities was up a little.
A 10.4 per cent increase by Well Health Technologies Corp. on good results prevented the health care sector from ending even lower.
Consumer discretionary was the biggest laggard, losing 2.4 per cent as shares of auto parts companies Magna International Inc. and Martinrea International Inc. fell 4.8 and 4.5 per cent, respectively.
Materials dropped 1.9 per cent on lower gold prices.
The February gold contract was down 60 cents US at US$1,842.60 an ounce and the March copper contract was up 11.25 cents at US$4.58 a pound.
The energy contract climbed as high as US$87.10 per barrel but lost ground to pull the sector lower as Birchcliff Energy Ltd. decreased 3.9 per cent.
The March crude contract was down 25 cents at US$85.55 per barrel and the March natural gas contract was down 19.6 cents at US$3.65 per mmBTU.
Crude prices were hurt by a buildup in U.S. stockpiles last week and the commodity was very overbought, said Archibald.
“I just think that some parts of the market are very overbought and probably likely to consolidate here.”
The Canadian dollar traded for 80.17 cents US compared with 80.05 cents US on Wednesday.
Archibald said the recent market softness was a buying opportunity, especially for quality names such as Morgan Stanley and Goldman Sachs that were oversold.
But he said Thursday was a negative day for the stock market broadly, especially since there have been weak closes almost daily so far this year.
“There are people moving their money out of the market at the moment just given all the uncertainty, the rotation and clearly the geopolitical issues that seem to be percolating.”
This report by The Canadian Press was first published Jan. 20, 2022.
India's envoy to Canada insists relations between the two countries are positive overall, despite what he describes as 'a lot of noise.'
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