Financials and energy sectors weigh on stocks in Toronto, U.S. markets see gains

By Canadian Press

TORONTO — It was a mixed day in markets Thursday as Canada’s main stock index closed down on poor performance in the financials and energy sectors while major U.S. stock indices saw gains driven by major tech companies.

The S&P/TSX composite index closed down 59.26 points at 13,899.32 after trading up earlier in the day on gains in the materials sector.

The financial sector in Toronto performed worse than the overall market, closing down 2.38 per cent as worries increase that a potential significant pullback in the real estate market could hit banks, said Philip Petursson, chief investment strategist at Manulife Investment Management.

“We’re starting to see more concern that insolvencies could pick up here, the recession is going to be deeper in Canada, and the banks are going to bear a little bit more of that weight.”

It’s “inevitable” that the Canadian real estate market will see a retreat as jobless claims rise and speculators hold back, he said.

“I definitely think Canadian real estate is going to see that correction that people have been talking about for the last decade that’s kind of eluded us.”

The big six banks saw declines ranging from 1.91 per cent for Royal Bank to 4.06 per cent for National Bank.

Petursson, however, said he believes Canadian banks are well diversified and there could be buying opportunities in the financial sector soon.

The energy index closed down 4.31 per cent as the price of oil slipped and TC Energy’s Keystone XL pipeline hit another judicial setback. TC Energy Corp. closed down 3.56 per cent and Suncor Energy Inc. was down 5.75 per cent.

In New York, the Dow Jones industrial average closed up 33.33 points at 23,537.68 and the S&P 500 index was up 16.19 points at 2,799.55 after both dipped into the red earlier in the day. The Nasdaq composite was up 139.19 points at 8,532.36 as both Amazon and Netflix notched gains.

The overall mixed picture on stocks showed hesitation in the market, said Petursson.

“It’s a day where the market’s looking for direction.”

He said the lack of movement and low volumes point to a potential stall to the recent rally. 

“To me that would say that we perhaps could be at an inflection point for the brief rally that we’ve seen, before we resume, perhaps, a second leg down.”

Bear markets typically see several false rallies of between 10 and 20 per cent before falling further to form a bottom, he noted.

The gains in U.S. markets came despite more than five million jobless claims last week, as the market hopes the help from the Federal Reserve will offset the immediate jobs picture.

“I think we’ve almost become numb to the bad news,” said Petursson.

The Canadian dollar traded for 70.81 cents US, down from an average of 70.99 cents US on Wednesday.

The June crude contract was down 51 cents at US$25.53 per barrel and the May natural gas contract was up 8.8 cents at US$1.69 per mmBTU.

The June gold contract closed down US$8.50 at US$1,731.70 an ounce and the May copper contract was down half a cent at US$2.29 a pound.

This report by The Canadian Press was first published April 16, 2020.

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

Ian Bickis, The Canadian Press


Top Stories

Top Stories

Most Watched Today