TORONTO — Canada’s main stock index lost ground to start a holiday-shortened week as fears about the Delta COVID-19 variant contributed to lowering crude oil prices.
Investor concerns were sparked by Britain reporting the most new COVID-19 cases since January, prompting countries to restrict visitors from the country, said Angelo Kourkafas, investment strategist at Edward Jones.
There have also been reports about outbreaks in Australia and some parts of Asia.
“The concern is that basically it’s going to slow down the reopening which we are seeing globally,” he said in an interview.
“It’s definitely an uncertainty, but in our view the potential is to delay but not derail the global recovery as we know that vaccination campaigns are underway and many economies are gradually reopening their economies, boosting demand.”
The S&P/TSX composite index closed down 85.01 points to 20,145.25 after initially rising to an intraday high of 20,273.61.
In New York, the Dow Jones industrial average was down 150.57 points at 34,283.27. The S&P 500 index was up 9.91 points to a record 4,290.61, while the Nasdaq composite was up 140.12 points to 14,500.51, also a record close.
Energy was a big laggard on the day, losing 3.1 per cent, as a curtailment of reopenings would hurt crude demand. In addition, OPEC plus its allies are expected to agree on Thursday to increase output by 500,000 barrels a day.
The August crude oil contract was down US$1.14 at US$72.91 per barrel and the August natural gas contract was up 7.3 cents at US$3.59 per mmBTU.
Shares of Enerplus Corp. was down 6.2 per cent, followed by MEG Energy Corp. at 5.3 per cent and Vermilion Energy Inc. at five per cent.
While oil prices were down on the day, Kourkafas said investors shouldn’t lose sight of the fact that prices are up about 10 per cent in June and not far from 2 1/2-year highs.
The Canadian dollar traded for 81.07 cents US compared with 81.36 cents US on Friday.
Materials was also lower despite higher gold prices.
The August gold contract was up US$2.90 at US$1,780.70 an ounce and the September copper contract was down 1.1 cents at nearly US$4.28 a pound.
The heavyweight financials sector fell with CIBC shares down 1.7 per cent while Air Canada shares lost 2.2 per cent to help push industrials lower.
Meanwhile, the technology sector climbed 1.5 per cent on variant worries that also boosted work-from-home names in the U.S.
The big tech names, including Apple Inc., Microsoft Corp. and Amazon.com, gained ground.
Kourkafas said the pace of the economic recovery will be evaluated on Friday when U.S. jobs numbers for June are released. Canada will release GDP numbers on Wednesday, a day before the Canada Day holiday.
Despite early weakness in the week, he said equities have done well in the first half of the year and are up about 15 per cent.
“So in terms of our expectation looking for the second half we expect more moderate gains. The markets are supported by strong economic growth and rising corporate profits but uncertainty around the virus or central bank policy could definitely spout bouts of volatility as we navigate the second half.”
This report by The Canadian Press was first published June 28, 2021.
Companies in this story: (TSX:AC, TSX:CM, TSX:ERF, TSX:MEG, TSX:VET, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press