Canada’s main stock index finished lower on Friday, while U.S. stock markets also retreated amid weakness in technology stocks.
Brian Madden, chief investment officer with First Avenue Investment Counsel, said that while Canada’s main stock index lost ground there was “underlying strength,” pointing to gains in the commodities sector as well as defensive stocks like telecoms.
“Although the index is down, there’s actually more gainers than decliners today,” he said.
Tech and financial stocks weighed on the S&P/TSX composite index’s performance on Friday.
Madden said software stocks have been facing pressure on both sides of the border.
In financial services, Canada’s Big Six banks reported earnings this week with solid performances.
“The Big Six banks all put up pretty good numbers, better than expected and for the most part traded well on the news, but I think they’re blowing off a bit of steam after rallying pretty hard year-to-date and on their results,” Madden said.
Investors on Friday also sifted through gross domestic product figures from Statistics Canada for the fourth quarter, which declined 0.6% on an annualized basis. GDP fell short of expectations from the Bank of Canada and most economists for flat growth.
Statistics Canada said the main reason for the contraction was businesses drawing down their inventories — in other words, selling off goods or materials that weren’t reproduced in the quarter.
Madden said the GDP figures were not “as bad as the surface number would signify, although the surface number is really not that good.” Many economists had similar reactions to the data.
The S&P/TSX composite index was down 161.97 points at 34,339.99.
In New York, the Dow Jones industrial average was down 521.28 points at 48,977.92. The S&P 500 index was down 29.98 points at 6,878.88, while the Nasdaq composite was down 210.17 points at 22,668.21.
U.S. stocks sank Friday as Wall Street kept punishing companies that could become losers in the artificial intelligence revolution.
The losses came as investors returned to knocking down software companies and other businesses they suspect could be supplanted by AI-powered competitors.
Block, the company behind Cash App, Square and other businesses, gave a potential signal of what AI could do after chair Jack Dorsey said it’s cutting its workforce by nearly half.
Also hurting the broader market was a report showing that inflation at the U.S. wholesale level was at 2.9% last month, much higher than the 1.6% that economists expected.
Some of the strongest action in financial markets was for oil. It’s the latest swing in a market unsettled by tensions between the United States and Iran over Iran’s nuclear program.
The April crude oil contract was up US$1.81 at US$67.02 per barrel.
The U.S. military has already gathered a massive fleet of aircraft and warships in the Middle East, and a conflict could disrupt the global flow of oil and drive prices higher.
“We’ve seen these types of knee-jerk reactions in the commodity pits for oil when you’ve had past conflagrations in the Middle East,” Madden said, pointing to when the U.S. struck Iranian nuclear facilities last summer.
The Canadian dollar traded for 73.30 cents US compared with 73.06 cents US on Thursday.
The April gold contract was up US$53.70 at US$5,247.90 an ounce.
— With files from The Associated Press