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 continued to gyrate Thursday in the aftermath of 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 pace of 6.9 per cent in the fourth quarter, far ahead of expectations, but that energy fell away by afternoon.
Philip Petursson, chief investment strategist at IG Wealth Management, attributed the market volatility to a valuation correction rather than anything being fundamentally wrong in the economies of Canada or the U.S.
"It's a tug of war between the buyers and the sellers. First half of the day, the buyers are winning, the back half of the day it seems that the sellers are applying a little bit more pressure," he said.
The Canadian market has been cheaper than U.S. markets and hasn't seen the same downside volatility, with support from energy that has been strong year-to-date.
"Today, gold is kind of detracting a bit as gold prices are falling, but overall, if you look at it it's a tale of two markets. You have the defensives: consumer staples, communications, utilities versus the expensive information technology," Petursson added.
The S&P/TSX composite index closed down 51.78 points to 20,544.11 after climbing as much as nearly 257 points in morning trading.
In New York, the Dow Jones industrial average lost 7.31 points at 34,160.78. The S&P 500 index was down 23.42 points at 4,326.51, while the Nasdaq composite gave up 189.34 points at 13,352.78.
Energy, telecommunications and consumer staples led the TSX with Suncor Energy Inc. increasing 2.6 per cent and Rogers Communications Inc. gaining 3.3 per cent on a strong revenue performance in its latest quarter. Grocer Metro Inc. led the consumer sector by rising 3.6 per cent.
Energy started the day strong, but weakened as crude oil prices moved negative.
The March crude oil contract was down 74 cents at US$86.61 per barrel after reaching a high of US$88.54. The March natural gas contract was up 24.7 cents at 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 to explain the price decline.
He rejected "chatter" that economic growth will slow as rates rise.
"I just think this is a function of oil is hitting levels that we haven't seen in years and so you're seeing the traders, the speculators, come in and take some profits."
The health care sector, which includes the big cannabis producers, lost 2.9 per cent with shares of Aurora Cannabis Inc. off 6.1 per cent and Tilray Inc. down 5.6 per cent.
Technology lost 2.2 per cent as Hut 8 Mining Corp. fell 10.9 per cent and Shopify Inc. lost 5.6 per cent.
The prospect of higher interest rates helped the U.S. dollar and took the shine off gold. U.S. Federal Reserve chairman Jerome Powell's statement Wednesday that rates could increase several times without hurting employment was viewed as hawkish.
Materials was down 1.3 per cent as miners lost ground with gold prices decreasing two per cent.
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 a pound.
The Canadian dollar traded for 78.67 cents US compared with 79.33 cents US on Wednesday.
This report by The Canadian Press was first published Jan. 27, 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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