A sign board in Toronto shows the closing number for the TSX on Thursdsay October 29, 2020. THE CANADIAN PRESS/Frank Gunn

Technology dropoff pushes TSX lower despite financials gains on strong bank results

Technology dropoff pushes TSX lower despite financials gains on strong bank results

TORONTO — A falling technology sector pushed Canada’s main stock index lower to offset strong bank results that lifted the heavyweight financials.

“It’s certainly a trend now after we had a really, really nice run up since November. We’re definitely seeing some losses, mostly across the board,” said Michael Currie, vice-president and investment adviser at TD Wealth.

The S&P/TSX composite index closed down 86.65 points to 18,330.09.

In New York, the Dow Jones industrial average and S&P 500 recovered from early losses with the Dow closing up 15.66 points at 31,537.35 while the S&P rose 4.87 points at 3,881.37.

These markets recovered after Federal Reserve chairman Jerome Powell eased concerns about a change in policy after telling Congress that inflation remained “soft” and the economic outlook was “highly uncertain.”

The tech-heavy Nasdaq composite pared some of its losses but closed down 67.85 points at 13,465.20.

“High-flyers” like Tesla and Shopify sustained large hits and even steady tech names like Apple and Microsoft were affected.

“There’s some profit-taking but there’s also some discussion that rising interest rates are a bit of a negative for the tech sector,” Currie said in an interview.

Montreal-based Lightspeed POS Inc. led Canada’s tech sector lower with a decrease of 7.7 per cent, and Shopify shares lost six per cent after it raised US$1.55 billion in a stock offering for the third time in a year.

Currie said the TSX would have been fairly flat without the tech losses.

Materials and health care were also laggards Tuesday. The metals and mining sector dropped 1.9 per cent as gold prices fell.

The April gold contract was down US$2.50 at US$1,805.90 an ounce and the March copper contract was up 3.75 cents at almost US$4.18 a pound.

Cannabis producer Aphria Inc. slipped 7.1 per cent to move health care lower.

Partially offsetting Tuesday’s losses were strong gains by the financials sector after BMO and Scotiabank reported profits above pre-pandemic levels to propel their shares up three and 2.8 per cent, respectively. Equitable Group Inc. shares plunged 10.6 per cent.

Investors were worried last year about the potential for massive loan losses after banks took huge provisions. But banks have been lowering those numbers, leading people to believe it’s not going to be nearly as bad as anyone was expecting, said Currie.

“You had a lot of people who were staying out of the banks for that reason are getting back into it.”

Currie said the first day of bank results sets the tone for the rest of the week.

“We’ve got two in the books right now and they’ve both been very solid so if we see more of that, this should continue.”

Energy was up 0.9 per cent as crude oil prices consolidated after Monday’s strong gain.

“They’re on a really nice roll here but a lot of investors recognized in the last couple of years they’ve had some pretty rough times. So a lot of these big gains are coming from fairly low levels.”

The April crude oil contract was down three cents at US$61.67 per barrel and the April natural gas contract was down 7.9 cents at nearly US$2.86 per mmBTU.

The Canadian dollar traded for 79.35 cents US compared with 79.28 cents US on Monday.

Industrials was helped by a 10.7 per cent increase for Thomson Reuters Corp. after it hiked it quarterly dividend.

This report by The Canadian Press was first published Feb. 23, 2021.

Companies in this story: (TSX:TRI, TSX:EQB, TSX:BMO, TSX:BNS, TSX:LSPD, TSX:SHOP, TSX:APHA, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

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