TORONTO — Canada’s main stock index fell nearly 300 points on Friday after a surprising rise on Thursday, dragged down by losses in energy and base metals, while U.S. markets fell at a faster pace. . The S&P/TSX Composite Index closed down 287.
TORONTO — Canada’s main stock index fell nearly 300 points on Friday after a surprising rise on Thursday, dragged down by losses in energy and base metals, while U.S. markets fell at a faster pace. .
The S&P/TSX Composite Index closed down 287.28 points at 18,326.35.
“I think what’s happening is investors are digesting the inflation numbers and the interest rate increases that are happening globally. And that brings some volatility,” said Anish Chopra, managing director of Portfolio Management Corp.
Between the slump in home sales and the slump in manufacturing sales, both announced on Friday, it’s clear the economic environment is slowing in Canada, Chopra said.
Normally, a slowing economy would signal interest rate cuts, but that’s not on the menu this time, he said; inflation is still lingering, as shown by warmer-than-expected data from the United States on Thursday.
Canadian inflation data for September will be released on October 19, and the market still expects persistent inflation numbers as interest rate hikes take time to trickle down to the economy, Chopra said.
Consumer inflation expectations are rising in the United States, Chopra noted, and major U.S. banks have started reporting earnings, showing earnings are down year-over-year.
They are making more money on interest spreads, but have to put money aside to cover possible defaults, and investment banking business is down, he said .
US markets were down as banks began reporting, with the Dow Jones Industrial Average falling 403.89 points to 29,634.83. The S&P 500 index fell 86.84 points, or more than 2%, to 3,583.07, while the Nasdaq composite fell 327.76 points, or more than 3%, to 10,321.39.
As more companies point this out, investors will be eager to see the pressure they feel due to the various economic headwinds, Chopra said.
“Over the next few weeks, investors will be looking at earnings from companies in both Canada and the United States, to see what the impact of inflation is on costs, as well as the ability of companies to grow. the costs.”
He said investors will also be looking to see what impact the central bank’s interest rate hike has had on corporate earnings and balance sheets.
The Canadian dollar was trading at 72.17 cents US versus 72.43 cents US on Thursday.
The November crude contract was down US$3.50 at US$85.61 a barrel and the November natural gas contract was down 28.8 cents at US$6.45 per mmBTU.
With high energy prices amid an economic downturn, Chopra said consumer demand for energy could be affected in the weeks and months ahead.
The December gold contract was down US$28.10 at US$1,648.90 an ounce and the December copper contract was down 1.7 cents at US$3.42 an ounce. book.
This report from The Canadian Press was first published on October 14, 2022.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
The Canadian Press
Note to readers: This is a corrected story. A previous release included incorrect closing numbers for the Dow Jones Industrial Average and the S&P 500 Index.