Canada's major stock indexfell nearly 300 points on Thursday, as investors continue to worry about a possible recession, so energy and mining stocks Is at the mercy of the influence.
S&P / TSX Composite Index fell 286.92 points to 18,717.12. This is the day after Statistics Canada announced that Canada's annual inflation rate was 7.7% in May, the largest increase of the month. Living expenses since January 1983.
Inflation data is the latest in a series of recent signs that investors have been weird about the potential for rising interest rates to cause a recession, said Alan, senior investment adviser to IA. Small said. Private wealth.
Read more: Banks of Canada face rare political heat amid rising inflation
"Clearly the Bank of Canada will continue to raise interest rates and maintain a positive stance," he said.
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"Overall, this (the surge in inflation) raises interest rates until housing is affected and the recession The sector that was hit hardest on Thursday was the oil and gas sector, with the S&P / TSX cap energy index. Was down 6.9% on the day. Some stocks in the index, such as Baytex Energy Corp., MEG Energy Corp. and Crescent Point Energy Corp., fell by more than 10%.
Due to Russia's invasion of Ukraine and the resulting turmoil in the global energy supply, Canada's oil and gas inventories were very strong in most of 2022, but some investors said. He said he was beginning to worry about a widespread recession. If that happens, _ takes a sip from the surge in demand.
"If there is a recession or fear of a recession, it basically slows everything down, so the demand side of the equation begins to decline," he said. "If people aren't going to travel that much and don't move around too much, you're not that imbalanced, you're more balanced."
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The Capped Materials Index, which includes some of Canada's largest mining companies, also lost ground on Thursday, dropping 5.0%.
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But south of the border, the market actually made a profit. In New York, the Dow Jones Industrial Average rose 194.23 points to 30,677.36. The S&P 500 index rose 35.84 points at 3,795.73, while the Nasdaq Composite index rose 179.11 points at 11,232.19.
Small said the difference between Canada and the United States is likely due to the testimony of Federal Reserve Chairman Jerome Powell this week. Powell reaffirmed the Fed's "unconditional" commitment to fighting inflation, while showing that the central bank's previously announced rate hikes may have already begun to affect the United States. ..
"They hinted that things are starting to slow down and demand is starting to slow in all sectors," Small said. "I think the United States is going further in this cycle of slowing down the economy, so while the United States continues to decline, the market is already rising."
Small He said it's a shame that key economic data and corporate earnings aren't expected in the coming weeks, as the current market is trading on the "fear" of a recession and not a solid rise. Stated. -Latest information.
He said that when the next set of measurements was released, it could indicate that US inflation had already peaked and Canada was just following. Said. This is good news for the market, according to Small.
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"Currently (in the data) there is some sort of calm period, and in my eyes it is It's a shame, "Small said. "If I'm right and inflation is above, I think we'll see a positive market in the second half of this year."
The Canadian dollar traded at 77.03 cents against 77.27 cents on Wednesday. I did.
August crude oil contracts fell $ 1.92 at $ 104.27 per barrel, and August natural gas contracts fell 59 cents at $ 6.28 per mmBTU.
August gold contracts fell $ 8.60 per ounce at $ 1,829.80, and July copper contracts fell 21 cents at $ 3.74 per pound.
© 2022 TheCanadian Press