The Canadian press
Employee
TORONTO –
Canada’s major stock index posted its biggest daily loss in three months mid-week to wipe out impressive gains that began in 2021.
The S&P / TSX Composite Index closed 354.98 points, or two percent, at 17,424.43, its lowest level since December 14th. The market started the year on fire and gained 3.5 percent in the first week.
In New York, the Dow Jones industrial average fell 633.87 points to 30,303.17. The S&P 500 index fell 98.85 points to 3,750.77, while the Nasdaq Composite fell 355.46 points to 13,270.60.
« The underlined sentiment in the market today is largely one of caution and risk aversion, and investors are taking a breather after prolonged profit margins with little specific catalyst for sell-offs, » said Candice Bangsund, portfolio manager for Fiera Capital.
She said investors were taking a break amid the uncertainties surrounding COVID-19 and its economic impact to assess the high valuations of stock markets.
Though she disagrees with some about a bubble, Bangsund says the « short-term slip » could be a sign of a correction in the 10 percent range.
« If you look at investor sentiment (and technical data), the rally seems to be a bit stretched and sentiment is approaching euphoria, » she said in an interview.
« These are usually the requirements for a short-term withdrawal, so I wouldn’t be surprised if we saw profit-taking. »
However, Bangsund continues to believe that the longer-term outlook remains extremely positive, especially as the year progresses.
« Therefore, any short-term weakness should be seen as a compelling opportunity to add stocks at a more attractive price. »
Nine of the 11 major sectors on the TSX were lower, led by Materials, Industrials, Consumer Discretionary and Finance.
Materials lost 3.5 percent due to lower metal prices, MAG Silver Corp. and Ivanhoe Mines Ltd. harmed.
The February gold contract fell $ 6 to $ 1,844.90 an ounce and the March copper contract fell 6.2 cents to nearly $ 3.56 an ounce.
Consumer discretion decreased 2.8 percent as shares in auto parts makers Linamar Corp., Martinrea International Inc., and Magna International Inc. fell 6.8, 5.5 and 4.7 percent, respectively.
Canadian insurance companies saw the biggest declines as the heavyweight financial sector lost 1.5 percent on lower bond yields.
Despite a surge in crude oil prices following a US report showing inventory levels rose the most for the past week since July, energy floated late in the day.
The March crude oil contract rose 24 cents to $ 52.85 per barrel and the March natural gas contract rose 6.6 cents to $ 2.70 per mmBTU.
Technology was the best performing sector of the day, up 0.6 percent as BlackBerry shares rose another 32.4 percent while Shopify Inc. lost 5.1 percent.
Bangsund said the Federal Reserve’s decision to keep interest rates unchanged and its commitment to continue buying bonds valued at $ 120 billion a month had no effect on stock market movements.
However, she said investors were a little disappointed that the US tax incentive schedule could be pushed back to around March as Republicans oppose President Joe Biden’s $ 1.9 trillion proposal / p>
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