Canada’s stock market rally has cracked. Volatility has spiked. And investors have been piling into government bonds, pushing yields to near-record lows.
Anxiety is everywhere for investors in the nation’s markets as the coronavirus outbreak and protests that hobbled rail traffic are magnifying concerns about an economic slowdown.
The S&P/TSX Composite Index lost this year’s gain in just four days of trading — it is down 0.1 per cent in 2020. It had been up 5.2 per cent as of last Thursday’s close.
A technical indicator that measures buying strength versus selling strength — known as the Bloomberg Fear and Greed indicator — slumped to the lowest level since the global market rout in the fourth quarter of 2018.
The coronavirus continued to spread across the world as new clusters of cases have emerged in Italy, Iran and South Korea. Ontario’s Chief Medical Officer of Health David Williams confirmed Wednesday a new positive case of the virus in Toronto, taking the number of infections in Canada to more than 10.
Meanwhile, environmental and indigenous-rights activists have obstructed rail lines across Canada for weeks to protest the construction of TC Energy Corp.’s CUS$6.6 billion (US$5 billion) Coastal GasLink pipeline in British Columbia. That has paralyzed parts of the nation’s rail network in recent weeks, bringing grain movement to a near halt.
Now, analysts are expecting profits to slow for the first quarter, according to data compiled by Bloomberg. Almost a quarter of companies that have reported earnings results since Jan. 17 have cited or answered questions related to the virus or rail blockades and its potential impact on profits, Brian Belski, chief investment strategist at Bank of Montreal, said in a report published Wednesday.
Belski isn’t so worried. “While the coronavirus Covid-19 and rail blockades suggest a double hit to the Canadian supply chain, our work shows the overall impact is likely to be relatively minor.” Supply disruptions will present near-term earnings risks, but profit growth will rebound down the road, he added.
Wild Ride
‘Overdue correction’: Stocks extend slide as virus fears weigh
Colin Cieszynski, chief market strategist at SIA Wealth Management, says we’re seeing an “overdue correction” in the markets as North American indices continue to fall on coronavirus fears.
Market turbulence has surged. At one point this week, volatility on the S&P/TSX soared to its highest level since Aug. 26. For the loonie, three-month implied volatility rose to the highest in almost four months as virus fears sparked demand to hedge the Canadian dollar’s weakness.
The loonie may continue to fall. Simon Harvey, a London-based market analyst at Monex Europe Ltd. and Monex Canada Inc., said that “currency markets may be lining up for another serving of a Poloz special –- talking the currency down in order to do the bank’s bidding in the short-run, thus buffering the Canadian economy from slowing global growth headwinds.”
Goldman Sachs Group Inc. recommends going long on the Japanese yen against the Canadian dollar as currency markets enter a “longer period of virus-related uncertainty,” strategist Zach Pandl said in a note to clients Wednesday.
His view is based on the expectation that risk aversion will remain high, “dollar bloc” currencies will underperform, and that the Bank of Canada could turn more dovish. Markets are pricing in at least two interest rate cuts from the central bank this year.
In fixed income, plunging bond yields boosted gains on government debt while spreads in the corporate bond market increased to their widest since mid-December. That’s another indicator of economic concern.
An aggregate index of Canadian bonds in U.S. dollars returned 1.4 per cent year to date, compared with a 2.9 per cent increase for a comparable U.S. benchmark, according to Bloomberg Barclays indexes. Yet investors snapped up a Canadian issue by Hydro One Ltd. on Wednesday, even as global credit markets grind to a virtual standstill amid the coronavirus outbreak.
For Baskin Wealth Management Chief Investment Officer Barry Schwartz, long-term fundamentals are what count. “My advice to investors is the following. If you are a long term investor, you should do nothing or use the opportunity to improve your portfolio,” he said in a tweet Wednesday.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
