stocks fall on technology, oil hits highest level since 2014 – .

stocks fall on technology, oil hits highest level since 2014 – .

TORONTO – A sharp drop in the tech sector sent Canada’s main stock index down to its lowest level since July, even as energy surged as crude oil prices hit all-time highs since 2014.

Stock markets are taking a break after what has been a strong 2021 amid a broader rotation of growth areas towards cyclical and value stocks as long-term bond yields rise, said Craig Fehr, strategist in investment, Edward Jones.

“If you look below the surface of the declines, what happens is that higher interest rates are weighing on growth investments, especially technology stocks, where the most acute weakness in the market is located.” , he said in an interview.

The 10-year US Treasury was stable that day, but the 10-year rate in Canada rose slightly above the US rate for the first time in some time.

“Long-term interest rates are higher, obviously reflecting ongoing inflationary pressures and expectations of less stimulus from central banks, but I think this also reflects the fact that the economic recovery will resume. a bit of momentum as we move towards the end of 2021 and into next year.

He also noted that small companies have outperformed large caps, signaling that the market is not as worried about the economic recovery and instead is reassessing the longer-term outlook for various sectors.

The S & P / TSX Composite Index closed 98.62 points lower at 20,052.25, the lowest level since July 20, after falling below 20,000 in the previous session.

In New York, the Dow Jones Industrial Index fell 323.54 points to 34,002.92. The S&P 500 Index lost 56.58 points to 4,300.46, while the Nasdaq composite lost 311.22 points or 2.1% to 14,255.48.

Canada’s healthcare and tech sectors lagged that day, losing 3 and 2.8 percent respectively.

Cannabis producers Tilray Inc. and Canopy Growth Corp. each lost 4.1%.

Lightspeed Commerce Inc. plunged 8.5% and Shopify Inc. plunged 3.1%.

Industry and finance are among the nine sectors that have lost ground. Among the few financial firms to counter the trend on Monday, Sun Life Financial Inc., which gained 2.4% after announcing a deal to buy U.S. dental provider DentaQuest for $ 3.1 billion.

Energy and materials were the winners as commodity prices rose.

Energy rose 2 percent, Enerplus Corp. gaining 4.2 percent, followed by MEG Energy Corp. at 3.3 percent and Crescent Point Energy Corp. up 3.2 percent.

November crude contract rose US $ 1.74 to US $ 77.62 per barrel after peaking at US $ 78.38 and November natural gas contract rose 14.7 cents at US $ 5.77 per mmBTU.

This propelled the loonie to a one-month high. The Canadian dollar was trading at 79.47 cents US from 79.03 cents US on Friday.

Materials also climbed, with the December gold contract rising US $ 9.20 to US $ 1,767.60 an ounce and the December copper contract rising five cents to $ 4.24 US per pound.

Commodity prices rise on a more robust demand outlook, Fehr said.

For oil, continued price increases are a signal that the global recovery and supply, including from OPEC and its allies, are unable to keep pace.

Fehr expects some market volatility to persist for some time, but there are signs that the “economic downturn” is easing a bit as the year end approaches.

He said the bitter start to the week should be placed in a larger context where markets are only a few percent of all-time highs despite Monday’s lows and last week’s pullback.

“Even with this renewed volatility slightly increasing investor anxiety, it reflects how strong the stock markets have been this year that we are still up, with healthy gains, even despite the recent decline. “

This report by The Canadian Press was first published on October 4, 2021.


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