S&P/TSX composite edges higher; U.S. stock markets down on inflation worries

Canada’s main stock index ticked higher on Thursday, even as U.S. markets slid on continuing investor concerns about inflation and rising interest rates. In Toronto, the S&P/TSX composite index was up 17.68 points at 21,855.

Canada’s main stock index ticked higher on Thursday, even as U.S. markets slid on continuing investor concerns about inflation and rising interest rates.

In Toronto, the S&P/TSX composite index was up 17.68 points at 21,855.70, supported by gains in the industrials, basic materials and energy sectors, while information technology and health care stocks — particularly cannabis stocks — fell.

 South of the border, stock markets stumbled. In New York, the Dow Jones industrial average was down 113.36 points at 34,451.23. The S&P 500 index was down 54 points at 4,392.59, while the Nasdaq composite was down 292.51 points at 13,351.08.

Mike Archibald, vice-president and portfolio manager with AGF Investments Inc., said there were some economic data releases and earnings results south of the border Thursday that contributed to the market jitters in the U.S. He added the segments of the market with momentum continue to be commodities and other defensive sectors as investors seek safety amid the backdrop of the ongoing war in Ukraine, as well as uncertainty surrounding central bank rate hikes by the U.S. Federal Reserve and other central banks.

“That’s related to the two things that are probably most top of mind for investors right now. Number one continues to be inflation, and the other one is just a broader category of higher level macro uncertainty,” Archibald said.

Inflation, and its impact on the broader economy, is a fear for investors in Canada as well. On Wednesday, the Bank of Canada raised its key interest rate half a point, the highest amount in more than 20 years as it warned more rate hikes are coming amid new forecasts for higher inflation levels.

But because the TSX is more heavily weighted toward commodities, it has been outperforming U.S. markets which have a greater number of high-growth, high-risk sectors such as technology, Archibald said.

Crude oil prices reversed an early decline Thursday and settled 2.6 per cent higher, and the TSX/S&P Capped Energy Index closed up 0.99 per cent. 

“Things that are correlated to inflation, which primarily is commodities, continue to exhibit great strength,” he said. 

On a price basis, Archibald said, the TSX/S&P index is up about three per cent since the start of the year, while the S&P 500 index is down approximately seven per cent.

“Canada continues to be just a massive outperformer on a year-to-date basis,” he said. “I think if you believe that commodities will remain elevated for at least the medium term, then I think this streak can probably continue.”

One of the biggest dramas in Thursday’s trading, Archibald said, was the ongoing situation surrounding Tesla founder and CEO Elon Musk and Twitter. Musk offered to buy the social media company for $54.20 a share, two weeks after revealing he’d accumulated a nine per cent stake.

Musk has criticized Twitter for not living up to free speech principles and said, in a regulatory filing, that it needs to be transformed as a private company. Twitter’s stock was down 1.9 per cent at $44.96, well below Musk’s offering price.

The Canadian dollar traded for 79.36 cents US Thursday compared with 79.32 cents US on Wednesday.

The May crude contract was up US$2.70 at US$106.95 per barrel and the May natural gas contract was up 30 cents US$7.30 per mmBTU.

The June gold contract was down US$9.80 at US$1,974.90 an ounce and the May copper contract was up a penny at US$4.72 a pound.

This report by The Canadian Press was first published April 14, 2022.

– With files from The Associated Press

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

Amanda Stephenson, The Canadian Press



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