S&P/TSX composite index recovers losses to close up as U.S. markets fall

S&P/TSX composite index recovers losses to close up as U.S. markets fall
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TORONTO — Canada’s main stock index recovered in afternoon trading, closing higher after posting a triple-digit decline early in the day.

The S&P/TSX composite index was up 45.63 points at 16,501.03.

“Despite the early morning sell-off … stocks have clawed back a good chunk of their losses,” said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.

The market was aided by a 13-per cent pop in shares in Aritzia Inc., which said on Wednesday night it had a narrower-than-expected loss in the quarter ending Aug. 30.

U.S. banks also continued to report quarterly earnings, with Morgan Stanley on Thursday reporting a 25 per cent jump in quarterly profit. A strong showing in the financials sector helped Toronto traders outpace U.S. markets on Thursday, Archibald said, despite the 17.5-per cent drop in shares of Aphria Inc., which left the S&P/TSX Capped Health Care Index more than one per cent lower.

Archibald noted that Toronto has larger share of financial companies and a smaller share of technology companies compared to the U.S. markets, which accounts for the divergence.

In New York, the Dow Jones industrial average was down 19.80 points at 28,494.20 and the S&P 500 index was down 5.33 points at 3,483.34. The tech-heavy Nasdaq composite was down 54.86 points at 11,713.87.

Archibald attributed the morning’s modest downturn in stocks to mixed economic data from the U.S., and news of new lockdown restrictions in Europe. Several European countries have also announced new restrictions, including a 9 p.m. curfew in Paris and restrictions on indoor gatherings in London.

Meanwhile, a snapshot of U.S. jobless claims on Thursday showed applications for unemployment benefits saw the biggest rise of the past two months.

The Canadian dollar traded for 75.59 cents US compared with 76.11 cents US on Wednesday.

Archibald also pointed to U.S. data impacting the energy market on Thursday, after the U.S. Energy Information Administration reported lower inventories.

Although prices of crude oil futures fell, Archibald said the outlook was not all bad, as inventory data suggested more demand for oil products.

“Exploration and production companies usually do fairly well on days like that — and that’s what you’re largely seeing in the Canadian space today,” said Archibald.

“Energy’s been a very tough part of the market. If you believe that the economy starts to normalize as we get into 2021, there’s the chance potentially for some of these things that have been really beat up to start to participate a little bit more to the upside.”

The December crude contract was down 10 cents US at US$41.24 per barrel and the November natural gas contract was up 14 cents US at almost US$2.78 per mmBTU.

In other commodities, the December gold contract was up US$1.60 an ounce at US$1,908.90 and the December copper contract was up 3.5 cents US at nearly US$3.09 a pound.

While stock, gold and currency markets alike have been watching lawmakers debate on a U.S. economic stimulus package, Archibald said that focus has faded.

“I think the market is largely discounted that there’s not going to be any stimulus pill before the election,” said Archibald.

The Canadian reporting season heats up next week with a number of companies set to release their results. Archibald said he is expecting the opening up of the economy this summer to boost performance for the quarter ending in August.

Companies with a focus on responsible investing might also get rewarded by investors, said Archibald, pointing to a 1.7 per cent rise in shares of Magna International Inc. on Thursday after the auto manufacturer announced an investment in electric vehicles.

But with COVID-19 cases rising in some regions — including within Canada — investors will also be listening closely to companies’ forecasts about profits and sales going forward, said Archibald.

“Parts of the market that have some level of economic sensitivity should do fairly well this quarter,” Archibald said.

“I think on balance, what is going to be most important, as you’ve seen thus far … is the forward guidance.”

This report by The Canadian Press was first published Oct. 15, 2020.

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

— With files from the Associated Press.

Anita Balakrishnan, The Canadian Press

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