TORONTO — Canada's main stock index closed down more than 250 points Tuesday in broad losses led by energy and technology over interest rate concerns and a drop in crude prices, while U.S. stock markets were also in the red.
Markets in both countries were down by more than one per cent for a second day as data such as job numbers and service sector activity showed continued strength, especially in the U.S., said Colin Cieszynski, chief market strategist at SIA Wealth Management Inc.
"Equities are responding to the fact that the North American economy is strong, which gives room, scope, for the Bank of Canada and the Fed to keep raising rates and to keep rates higher for longer."
On Tuesday the Ivey Purchasing Managers Index showed steady business activity in Canada, while on Monday numbers out of the U.S. on service sector activity beat expectations, adding to concerns created Friday as U.S. jobs numbers came in stronger than expected.
The data comes as the Bank of Canada is set to make its latest rate hike decision on Wednesday with a half a percentage point increase expected, said Cieszynski, while the U.S. Fed announces its rate decision on Dec. 14.
The economic indicators are dampening any near-term expectations of a rate reversal, he said.
"Anybody who thought the Fed or the Bank of Canada would pivot, and not just pivot to slowing rate hikes, but to actually start cutting, I think that's kind of going away."
The outlook helped push the S&P/TSX composite index down 252.09 points to close at 19,990.17.
The Canadian market was especially weighed down by losses in the energy index, which was down 3.5 per cent for the day including Suncor Energy Inc. down 3.1 per cent and MEG Energy Corp. down almost six per cent.
Energy stocks were under pressure for a second day as oil prices continued to slide after OPEC-plus decided not to change its production outlook over the weekend, helping push the January crude contract down US$2.68 to US$74.25 per barrel and the January natural gas contract down 11 cents at US$5.47 per mmBTU.
Cannabis companies also saw significant losses, including Canopy Growth Corp. down 16.4 per cent and Aurora Cannabis Inc. down 11.8 per cent to erase gains made on Friday after the passage of U.S. legislation on medical cannabis research.
In New York, the Dow Jones industrial average was down 350.76 points at 33,596.43. The S&P 500 index was down 57.58 points at 3,941.26, while the Nasdaq composite was down 225.05 points at 11,014.89.
The Canadian dollar traded for 73.27 compared with 73.90 cents US on Monday, with declines likely linked to the fall in crude prices, said Cieszynski.
The February gold contract ended up US$1.10 at US$1,782.40 an ounce and the March copper contract was up 2.3 cents at US$3.82 a pound.
This report by The Canadian Press was first published Dec. 6, 2022.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
The Canadian Press
Note to readers: This is a corrected story. A previous version had the incorrect closing number for the S&P/TSX composite index.
