Shopify selloff and inflation spike help drive down S&P/TSX Composite Index

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TORONTO — A selloff by Shopify Inc. dragged Canada’s main stock index lower as minutes from a recent Federal Reserve meeting eased U.S. market fears of an impending interest rate hike.

TORONTO — A selloff by Shopify Inc. dragged Canada’s main stock index lower as minutes from a recent Federal Reserve meeting eased U.S. market fears of an impending interest rate hike.

“Shopify is definitely the big Canadian deal today and obviously that also has a big effect on the US as well, particularly the Nasdaq,” said Michael Currie, Vice President and Investment Advisor at Wealth Management. TD.

Canada’s tech sector fell 3.9% as shares of the e-commerce giant plunged 17.1% to their lowest level in nearly two years after warning that 2022 revenue would be hit by a easing of global restrictions related to COVID-19.

Fourth-quarter revenue rose, but the company said the growth would not match the 57% gain in 2021, Currie said in an interview.

“The COVID-triggered e-commerce acceleration will be absent going forward (amid) concerns about inflation and consumer spending,” he said.

The S&P/TSX Composite Index closed down 118.91 points at 21,383.64.

In New York, the Dow Jones Industrial Average was down 54.57 points at 34,934.27. The S&P 500 index rose 3.94 points to 4,475.01, while the Nasdaq composite fell 15.66 points to 14,124.10.

Markets pared some of the early losses after the minutes of the Fed’s last meeting were released at 2 p.m.

The minutes produced no surprises, with members giving no indication of the pace of rate hikes, although the central bank said it was ready to react depending on the data.

“The fact that there were no surprises, and then the very nervous people calmed down a bit, so the sales were reduced,” Currie said.

However, U.S. retail sales beat expectations at 3.8% in January, perhaps bolstering a likely rate hike sooner rather than later, he said.

Commodities led the TSX on Wednesday with Materials and Energy leading the four sectors to advance.

Materials rose 1.8% as gold futures hit their highest level since June.

The April gold contract rose US$15.30 to US$1,874.50 an ounce and the March copper contract rose half a cent to nearly US$4.54 an ounce. delivered.

Shares of Barrick Gold Inc. rose 7.1% after the miner raised its dividend and beat expectations despite lower earnings last year.

“Almost everything you want to hear good from a company,” Currie said.

Energy rose 0.7% as crude oil prices rose on geopolitical uncertainty in Europe. Prices fell on Tuesday following signs that the Russians were withdrawing some troops from the Ukrainian border, but rose again when NATO and the United States said on Wednesday they had no official indication of a such decision.

The March crude oil contract rose US$1.59 to US$93.66 per barrel and the March natural gas contract rose 41.1 cents to US$4.72 per mmBTU.

The shares of Birchcliff Energy Ltd. rose 4.0% while those of Canadian Natural Resources Ltd. increased by 2.0%.

Meanwhile, the Canadian dollar rose after Statistics Canada reported that the annual pace of inflation exceeded 5% in January for the first time in more than 30 years.

The loonie was trading at 78.83 US cents against 78.36 US cents on Tuesday.

This report from The Canadian Press was first published on February 16, 2022.

Companies in this story: (TSX:SHOP, TSX:ABX, TSX:BIR, TSX:CNQ, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press


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