TORONTO — Canada's main stock index ended down almost a hundred points after starting the day with strong gains, while U.S. markets saw a similar reversal after the morning increase.
The S&P/TSX composite index was down 95.11 points at 18,579.29.
Some major TSX companies, like Shopify (up almost five per cent), had a good day Thursday, said Ashish Utarid, assistant vice-president of investment strategy at IG Wealth Management. However, markets in Canada were dragged down in particular by the industrials category, he said, where both Canadian Pacific Railway and Canadian National Railway were down after Union Pacific predicted slower growth in the U.S.
"(Union Pacific) were saying lighter loads are really trimming their outlook for shipping volumes, which is going to affect all the rails in North America. So when the U.S. reports Canada feels that effect as well," Utarid said.
“We believe that's a precursor for some of the slowdown and some disinflationary pressure that we're feeling."
In New York, the Dow Jones industrial average was down 90.22 points at 30,333.59. The S&P 500 index was down 29.38 points at 3,665.78, while the Nasdaq composite was down 65.67 points at 10,614.84.
In this market, signs of a slowdown may be good news, as investors are hoping the central banks will finally ease off on their quantitative tightening, said Utarid.
While central banks aren’t done raising rates yet, they’re nearing the anticipated end of their tightening campaigns, he said, giving the markets a steadier path ahead into the new year.
“They might be raising rates in the near term. But if we look ahead to 2023, they can't go on forever,” he said.
That means the ongoing volatility markets have experienced this year may be easing, said Utarid.
“We know what to expect,” he said — one rate hike next week in Canada, and a potential small hike in December depending on how things go.
“We’re seeing disinflationary pressure, manufacturing has come down a little bit in the last two months. So all of those are good signs that what they’re doing is working. We just don’t want them to overstep.”
The Canadian dollar traded for 72.84 cents US, compared with 72.57 cents US on Wednesday.
Sentiment is at an all-time low, said Utarid, and it’s only a matter of time before there’s a rebound in the markets once they find their bottom.
“That's typically when markets start to rally,” he said.
The December crude contract was down one cent at US$84.51 per barrel and the November natural gas contract was down 10 cents at US$5.36 per mmBTU.
The December gold contract was up US$2.60 at US$1,636.80 an ounce and the December copper contract was up 9.3 cents at US$3.41 a pound.
This report by The Canadian Press was first published Oct. 20, 2022.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
The Canadian Press
