Financial numbers flow on the digital ticker tape at the TMX Group in Toronto's financial district on May 9, 2014. THE CANADIAN PRESS/Darren Calabrese

S&P/TSX composite falls but ends quarter with best month since October

S&P/TSX composite falls but ends quarter with best month since October

TORONTO — Canada’s main stock index moved lower due to pessimism about the war in Ukraine and a drop in crude oil prices but Thursday’s movement belied its strong performance in the first quarter, with March being the best month since October.

The market rallied earlier this week on hopes for a peace deal, but recent news has been more negative and is mostly what’s been driving the weakness in global markets over the past two days, said Jules Boudreau, economist at Mackenzie Investments.

The S&P/TSX composite index lost 185.80 points to 21,890.16 as it dropped at the close after hitting a record high of 22,181.75 in earlier trading.

In New York, the Dow Jones industrial average was down 550.46 points at 34,678.35. The S&P 500 index was down 72.04 points at 4,530.41, while the Nasdaq composite was down 221.75 points at 14,220.52.

A month-end rebalancing of portfolios by big pension funds and asset managers also contributed to the day’s losses.

While the war has been the predominant theme, the U.S. government’s decision to release one million barrels per day from its strategic petroleum reserves weighed on crude oil prices, which fell seven per cent.

“But it’s not a major policy and we’re seeing markets interpret it like that,” Boudeau said the drawdown in reserves.

“It’s really more a global story with Russia and Ukraine and you see it because the markets that were the most impacted were the European market, U.K. market, emerging markets (while) U.S. and Canada were a bit more resilient. And that’s typically the pattern we’ve seen when the market moves have been driven by Russia, Ukraine.”

The May crude oil contract was down US$7.54 at US$100.28 per barrel. That’s up 4.8 per cent for the month and 33.3 per cent for the quarter. The May natural gas contract was up 3.7 cents at US$5.64 per mmBTU.

Parex Resources Inc. lost 4.5 per cent on the day while Freehold Royalties Ltd. was 3.8 per cent lower.

The Canadian dollar traded for 80.03 cents US compared with 80.19 cents US on Wednesday.

Boudreau doesn’t attribute the loonie’s movement to GDP numbers that showed the Canadian economy grew 0.2 per cent in January while the initial estimate suggests the real gross domestic product grew 0.8 per cent in February.

He said the Canadian dollar has mostly followed crude prices “and the strength of the Canadian economy, but I wouldn’t attribute it to a backward-looking measure like the GDP data.”

March was a positive month for North American stock markets thanks to a strong second half with the TSX and S&P 500 up 3.6 per cent, the Dow up 2.3 per cent and Nasdaq 3.4 per cent higher.

The Toronto market was more resilient than U.S. markets over the first three months of 2022, gaining 3.1 per cent. American stock markets suffered their worst decrease in two years with the S&P losing 4.9 per cent, the Dow falling 4.6 per cent and Nasdaq in correction territory with a 7.9 per cent drop.

“So an investor in the TSX got a good gain, but also avoided the drawdown that could have led to investing errors that we saw in the S&P 500,” he said.

“So I would say that the overall results for the month probably understate how well the TSX has done because it’s avoided the big drawdowns the S&P or Europe or emerging markets have had.”

Health care was the laggard on the day, decreasing 2.2 per cent with Canopy Growth Corp. down 4.5 per cent.

Technology lost 1.8 per cent as Hut 8 Mining Corp. decreased 4.6 per cent and Shopify Inc. was down 3.9 per cent.

The heavyweight financials sector was also lower with all banks falling on the day led by a 2.7 per cent decrease for Laurentian Bank.

Materials fell with the June gold contract was up US$15.00 at US$1,954.00 an ounce and the May copper contract was essentially flat at US$4.75 a pound.

This report by The Canadian Press was first published March 31, 2022.


Ross Marowits, The Canadian Press