S&P/TSX composite slips in another volatile day of trading; U.S. markets mixed

Ross Marowitz, The Canadian Press

Published Thursday, January 27, 2022 5:18 PM EST

TORONTO – North American stock markets continued to fluctuate on Thursday in the wake of the central bank’s plans to start raising interest rates in the coming weeks.

Markets received a morning boost after a report that the US economy grew at an annualized pace of 6.9 percent in the fourth quarter, far exceeding expectations, but that energy waned in the afternoon.

Philip Peterson, chief investment strategist at IG Wealth Management, attributed the market volatility to a valuation correction rather than anything fundamentally wrong with the Canadian or US economies.

“It’s a tug of war between buyers and sellers. The first half of the day, the buyers are winning, in the back half of the day the sellers seem to be putting on a little more pressure,” he said.

The Canadian market has been cheaper than the US market and has not seen the same negative volatility, backed by energy that has been strong year-to-date.

“Today, gold is kind of declining a little bit as gold prices go down, but overall, if you look at it it’s a story of two markets. You have the defenses: basic consumer goods, telecommunications, utilities versus expensive IT,” added Peterson.

The S&P/TSX Composite Index closed 51.78 points lower at 20,544.11 after rising nearly 257 points in morning trade.

In New York, the Dow Jones Industrial Average lost 7.31 points at 34,160.78. The S&P 500 lost 23.42 points at 4,326.51, while the Nasdaq Composite lost 189.34 points at 13,352.78.

Energy, telecoms and consumer staples led TSX as Suncor Energy Inc. rose 2.6 percent and Rogers Communications gained 3.3 percent thanks to a strong revenue performance in the fourth quarter. Grocer Metro Inc. Consumer sector, up 3.6 percent.

Energy started the day strong, but weakened as Crude Oil prices moved to negative.

The price of crude oil contracts for the month of March (March) fell 74 cents to $86.61 a barrel, after reaching the highest level at $88.54. The March natural gas contract rose 24.7 cents to $4.28 per million British thermal units.

“Oil has been strong year-to-date, and it’s at a level that I think you can see some profit taking coming into the market,” Petorsson said to explain the price drop.

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

“I think that’s a function because oil is reaching levels that we haven’t seen in years and so you see traders and speculators come in and get some profits.”

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

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

The prospect of higher interest rates helped the US dollar and removed the luster of gold. US Federal Reserve Chairman Jerome Powell’s statement on Wednesday that interest rates can rise several times without hurting employment is considered reactive.

Material prices fell 1.3 percent as miners lost ground with gold prices down 2 percent.

The February gold contract fell $36.60 to $1,793.10 an ounce and the March copper contract fell 9.2 cents at $4.42 a pound.

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

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

Companies in this story: (TSX: SHOP, TSX: RCI.B, TSX: WCP, TSX: MRU, TSX: SU, TSX: HUT, TSX: GSPTSE, TSX: CADUSD


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