TORONTO — Canada's main stock index inched higher midweek as Shopify Inc. overtook the Royal Bank of Canada to become the country's most valuable company thanks in part to a boom in online shopping while Canadians adopt physical distancing.
The Ottawa-based technology company's market capitalization increased to nearly $121.3 billion after its shares rose nearly seven per cent or $67.17 to $1,034.42 after it reported quarterly revenue growth and strong demand for its services.
Shopify's shares have doubled year-to-date and have surged from $357.14 over the past 52 weeks.
Royal Bank's shares were down slightly Wednesday and have declined 17.6 per cent this year and nearly 21 per cent over the year as the banking sector has come under pressure.
"A couple months ago, we were talking about what a great Canadian success story (Shopify was)," said Michael Currie, vice-president and investment adviser at TD Wealth, about the tech company before it overtook RBC.
"They just blew away expectations. And so, even in the midst of this pandemic, there are companies that are coming out saying: business is great. And Shopify is certainly one of them."
Rising to that top spot in Canada doesn't guarantee perpetual success. Blackberry (then called Research in Motion), Valeant and Nortel all had the title at one time.
The technology sector gained nearly 3.8 per cent on the day with Blackberry up six per cent.
The S&P/TSX composite index closed up 19.18 points at 14,830.74.
In New York, the Dow Jones industrial average was down 218.45 points at 28,664.64. The S&P 500 index was down 20.02 points at 2,848.42, while the Nasdaq composite was up 45.27 points at 8,854.39 on another strong performance from tech companies.
The Canadian dollar traded for 70.80 cents US compared with an average of 71.27 cents US on Tuesday.
Energy and materials were the big losers Wednesday. The sectors lost 2.9 and 1.9 per cent respectively under price pressure from crude oil and gold as Frontera Energy Corp. was down 5.6 per cent and Barrick Gold Corp. was off 5.4 per cent.
Suncor Energy Inc., long viewed as one of the biggest, steadiest energy companies, reported a huge loss and cut its dividend.
The July crude oil contract was down 87 cents at US$25.62 per barrel and the June natural gas contract was down 19 cents at US$1.94 per mmBTU.
The June gold contract was down US$22.10 at US$1,688.50 an ounce and the July copper contract was up 1.45 cents at nearly US$2.35 a pound.
Oil snapped a five-day winning streak on concerns about tightening oil storage capacity.
"Even though the weekly crude inventories rose less than expected and domestic production declined ... the capacity issues seem to be the biggest explanation for the drop today," Currie said.
Investors seemed to ignore for the most part negative economic data, including Wednesday's report that private U.S. employers cut 20.2 million more jobs than they created last month.
Currie said there's a tug of war between optimism that economic reopenings signal that COVID-19 may be behind us and those that believe the market recovery was too fast.
"There's still a lot of people in the double-dip camp, that we need to retest the lows before we can head further. So it seems to be a bit of a balancing act right there in the last few weeks."
Currie noted the big difference between the market drop and the recovery.
"On the way down it was everybody. On the way back up it's only certain areas that are better than others."
This report by The Canadian Press was first published May 6, 2020.
Companies in this story: (TSX:SHOP, TSX:RY, TSX:BB, TSX:ABX, TSX:SU, TSX:FCC, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
