TORONTO — Canada’s main stock index ended down more than 350 points Tuesday as it caught up to the U.S.’s Monday decline.
However, while energy stocks were a bright spot last week amid widespread losses, this week energy was down too on economic concerns.
The S&P/TSX composite index was down 366.45 points or 2 per cent at 18,216.68.
In New York, the Dow Jones industrial average was up 36.31 points at 29,239.19. The S&P 500 index was down 23.55 points at 3,588.84,while the Nasdaq composite was down 115.91 points at 10,426.19.
“This is a week that’s going to be really tough to figure out,” said Greg Taylor, chief investment officer at Purpose Investments.
That’s because right now investors are in a holding pattern waiting for U.S. inflation numbers, which come out Thursday, he said.
“People aren’t really making bets,” said Taylor. “It’s all people waiting to see if there’s any signs of a peak in inflation before we can make any sense of whether we’re going to be bullish or bearish.”
The Canadian markets were playing catch-up with the U.S. Tuesday after being closed a day earlier for the Thanksgiving holiday, Taylor said, which is why the two markets behaved so differently.
The U.S. markets Monday were down across the board, while Canadian markets were closed for Thanksgiving, explained Taylor.
“Everyone is so fixated on when the central banks are going to start to back off on their hawkish tone.”
September’s U.S. inflation numbers were a “massive turning point” for the markets, said Taylor, and investors seem a lot more cautious going into the next data release.
While buying during a dip has traditionally been the best strategy, the mentality now seems to be to wait for evidence that things are going to go back up, said Taylor.
“We need to see inflation come down before we can get people to take on any real increased risk levels,” he said.
The Canadian dollar traded for 72.60 cents US compared with 72.93 cents US on Friday.
The November crude contract was down US$1.78 at US$89.35 per barrel and the November natural gas contract was up 16 cents at US$6.60 per mmBTU.
Last week, even when the markets were down, energy stocks got a bump from OPEC Plus’s surprise production cut, said Taylor.
But this week, energy stocks helped lead the decline across markets, with the TSX energy index down by almost four per cent at close.
After last week, energy stocks are down over concerns of a global recession or economic slowdown and what that would do for demand, said Taylor.
“China seems to be still on lockdown … the fear there is that there could be more slowdown in demand for oil,” he said.
“I think that’s what’s really been the big problem with energy stocks, which have been the lone bright spot.”
The December gold contract was up US$10.80 at US$1,686 an ounceand the December copper contract was up three cents at US$3.46 a pound.
This report by The Canadian Press was first published Oct. 11, 2022.
Companies in this story: (TSX:GSPTSE, TSX_CADUSD=X)
