TSX snaps positive streak despite hitting all-time high ahead of policy cues from Fed

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TORONTO — Canada’s main stock index snapped a seven-day winning streak despite hitting an all-time high as investors await policy cues Wednesday from the Federal Reserve.

The S&P/TSX composite index closed down 80.74 points to 18,874.01 after setting an intraday record of 18,974.19.

In New York, the Dow Jones industrial average was down 127.51 points at 32,825.95. The S&P 500 index was down 6.23 points at 3,962.71, while the Nasdaq composite was up 11.86 points at 13,471.57.

“It’s a bit of a normal pullback in markets today,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

The declines came after the TSX, Dow and S&P had record days to start the week and the TSX and S&P 500 hit intraday highs.

“I think the reason we’re getting this retrenchment is people are waiting to see what the Fed has to say tomorrow,” he said in an interview.

The U.S. central bank will likely decide to “stay the course” in terms of interest rates as did the Bank of Canada last week. But markets will be parsing words from chairman Jerome Powell for signs of worry about inflation or any cutback on asset purchase programs.

Investors will also be paying close attention to projections. Does he raise the outlook for GDP, lower unemployment and what does Powell say about inflation and bond yields.

“There’s a lot of moving pieces and I think what’s happened today is people are just kind of taking a breath, sitting on their hands and just kind of taking some money off the table waiting to see what the Fed has to say.”

The Fed’s moves come after Bank of Canada governor Tiff Macklem said last week he wasn’t worried about bond yields and would be staying the course on the near-zero key interest rate.

European Central Bank president Christine Lagarde vowed to step up asset purchases to keep a lid on yields.

Cieszynski said he doubts Powell will follow Europe’s example. They could let short-term rates increase to drive down long-term rates as they did about a decade ago, but Cieszynski is not convinced.

“If they were to signal that they’re planning on lifting stimulus you could see a correction in the markets,” he said.

“Anything that suggests they might not be full-on, pedal to the mettle stimulus could be seen as negative in the short-term.”

Health care was the biggest laggard on the day, falling 4.8 per cent with cannabis producers Aphria Inc., Aurora Cannabis Inc., Canopy Growth Corp. and Cronos Group Inc. down 9.3, 6.8, 5.5 and 5.2 per cent, respectively.

Energy lost 3.2 per cent on lower crude oil prices with MEG Energy Corp. down 5.3 per cent, Crescent Point Energy Corp. 4.8 per cent lower and Canadian Natural Resources Ltd. off 4.25 per cent.

Crude prices could be faltering a little on concerns that expanding infections from COVID-19 variants could negatively impact the outlook for demand, said Cieszynski.

The April crude oil contract was down 59 cents at US$64.80 per barrel. That’s still up nearly 34 per cent in 2021. The April natural gas contract was up 7.8 cents at US$2.56 per mmBTU.

The Canadian dollar traded for 80.29 cents US compared with 80.13 cents US on Monday.

Lower metals prices pushed materials down with First Quantum Minerals Ltd. off 6.15 per cent.

The April gold contract was up US$1.70 at US$1,730.90 an ounce and the May copper contract was down 6.9 cents at US$4.07 a pound.

Telecommunications was the best sector for a second-straight day. Rogers Communications Inc. climbed 5.6 per cent and Shaw Communications Inc. rose 2.5 per cent a day after announcing the blockbuster $26-billion purchase by Rogers.

Companies in this story: (TSX:FM, TSX:RCI. B, TSX:SJR. B, TSX:MEG, TSX:CPG, TSX:CNQ, TSX:APHA, TSX:ACB, TSX:WEED, TSX:CRON, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press