People walk on Bay Street in Canada's financial district in Toronto on Wednesday, March 18, 2020. THE CANADIAN PRESS/Nathan Denette

Late rally prevents North American stock markets from poor start to May

Late rally prevents North American stock markets from poor start to May

TORONTO — A late rally prevented North American stock markets from getting off to the same dismal start in May that was endured in April.

The day started down as last week’s global equity market selloff extended into the new month “with weaker than expected manufacturing data out of the United States adding to fears of an economic slowdown and curbing risk appetite,” said Candice Bangsund, portfolio manager for Fiera Capital.

Data on Monday showed that the ISM gauge of U.S. manufacturing activity unexpectedly dropped to the lowest level since 2020, she said.

U.S. benchmark 10-year treasuries climbed above three per cent for the first time since 2018 in anticipation that the Federal Reserve will hike interest rates on Wednesday by 50 basis points to tackle soaring inflation. They ended the day at 2.979 per cent.

The S&P/TSX composite index closed down 69.78 points to 20,692.22 after losing as much as 305 points.

After being down for most of the day, the Dow Jones industrial average gained 84.29 points at 33,061.50. The S&P 500 index was up 23.45 points at 4,155.38, while the Nasdaq composite was up 201.38 points at 12,536.02.

Real estate was the biggest laggard on the TSX, falling 3.9 per cent as several large real estate income trusts sustained deep share losses.

Utilities and telecommunications were also weaker while commodities dropped.

Energy recovered from a big early loss to dip slightly even though crude oil prices reversed course to end the day slightly higher. Prices for refined products soared, which helped to counter threats to China’s demand outlook stemming from COVID-induced lockdowns, Bangsund wrote in an email.

“Strength in refined products is attributed to depleted supplies around the world as countries cut back on Russian fuel,” she said.

The weak start to the day came as China’s purchasing manager indexes for April revealed a sharp contraction in economic activity as it struggles to contain the COVID outbreak.

The June crude contract was up 48 cents at US$105.17 per barrel and the June natural gas contract was up 23.1 cents at nearly US$7.48 per mmBTU.

The materials sector was down 0.6 per cent as the price of gold fell as the U.S. dollar touched a five-year high and treasury yields moved higher, both of which dampened appetite for non-interest bearing bullion.

The June gold contract was down US$48.10 at US$1,863.60 an ounce and the July copper contract was down 14.1 cents at US$4.27 a pound.

Sandstorm Gold Ltd. was the weakest in the materials sector after it announced the signing of a pair of acquisitions worth a total of US$1.1 billion.

Technology rebounded to lift the Nasdaq and S&P 500 into positive territory after both hit their lowest point of 2022 earlier in the day.

The Canadian tech sector was up 1.7 per cent with Shopify Inc. gaining 6.1 per cent.

Health care was also 1.4 per cent higher as Canopy Growth Corp. and Tilray Inc. increased 5.3 and 5.2 per cent, respectively.

The Canadian dollar fell to the lowest level of the year by trading for 77.55 cents US, compared with 78.17 cents US on Friday.

This report by The Canadian Press was first published May 2, 2022.

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

Ross Marowits, The Canadian Press