S&P/TSX composite down as shares of Shopify tumble, U.S. stock markets mixed

TORONTO — Shares of tech heavyweight Shopify fell almost 19 per cent Wednesday, weighing on Canada’s main stock index, while U.S. markets were mixed. 

The S&P/TSX composite index closed down 31.46 points at 22,259.16.

In New York, the Dow Jones industrial average was up 172.13 points at 39,056.39. The S&P 500 index was down 0.03 points at 5,187.67, while the Nasdaq composite was down 29.80 points at 16,302.76.

Shopify reported a loss in its first quarter despite increased revenue. The company also forecast slower revenue growth for the next quarter. 

Shopify is the biggest tech company on the TSX and a major weight on the index, said Jennifer Tozser, senior wealth adviser and portfolio manager with Tozser Wealth Management at National Bank Financial Wealth Management.

The company’s earnings weren’t bad, but its future growth outlook wasn’t as rosy as investors hoped for, said Tozser.

Shopify is one of many companies that did well during the pandemic and is now grappling with what its post-COVID future looks like, she said. 

As Canadian earnings season gets underway, Tozser said she isn’t expecting a lot of surprises.

“That’s why the Shopify one is so unique … because it’s not a sector that there’s a lot of depth in in Canada,” she said. 

The TSX information technology index fell 4.2 per cent Wednesday, while most other sectors posted modest gains. 

Earnings continued to trickle in south of the border as the U.S. season draws to a close. 

Uber Technologies saw its share price slump after its results fell short of analysts’ expectations, while Lyft shares rose after beating expectations. 

Tozser thinks markets will see a sector rotation once central banks start cutting interest rates, favouring companies in sectors like industrial, consumer discretionary and REITs. 

In Canada, rate cuts could begin as soon as June, with weaker economic data putting pressure on the Bank of Canada to ease off, said Tozser.

Meanwhile, cuts in the U.S. aren’t expected until near the end of the year.

That puts the Bank of Canada in a difficult spot, Tozser said.

“The concern is that if we cut and the U.S. doesn’t, we’re going to trash our currency,” she said. 

The Canadian dollar traded for 72.81 cents UScompared with 72.97 cents US on Tuesday.

The June crude oil contract was up 61 cents at US$78.99 per barrel and the June natural gas contract was down two cents at US$2.19 per 1,000 cubic feet.

The June gold contract was down US$1.90 at US$2,322.30 an ounceand the July copper contract was down seven cents at US$4.54 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published May 8, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD) 

Rosa Saba, The Canadian Press