Canada’s main stock index closed down despite a rise in oil prices as technology stocks continued to weigh on markets in both Toronto and New York.
The technology sell-off started last week when Facebook Inc. and Twitter Inc. released results that raised growth concerns. On Monday, Twitter dropped by 7.6% to add to its 20.5% plunge on Friday, while Facebook fell by 3.6% to make for a 23% drop in three trading days.
The S&P/TSX information technology sector was down by 3.7% Monday, including a drop of 8% for Shopify Inc., as the plunge in U.S. stocks had a knock-on effect, said Michael Greenberg, portfolio manager at Franklin Multi-Asset Solutions: “The big contributor there is Shopify, but they haven’t even had their earnings call, so I think it’s really just a bit of a contagion of what’s happening in the U.S.”
The drop in technology stocks, along with retreats for mining and health-care stocks, left the Toronto Stock Exchange’s S&P/TSX composite index down by 48.5 points at 16,345.5.
The index traded as high as 16,443 during the day. The Toronto Stock Exchange, as a whole, saw 219.1 million shares traded.
The S&P/TSX capped energy index provided the most support for the S&P/TSX composite index with a 0.6% climb. Energy stocks rose as the September crude contract closed up by US$1.44 at US$70.13 a barrel and the September natural gas contract ended up by US2¢ at US$2.80 per mmBTU.
Oil prices were climbing as concerns increased on transit problems in the Middle East and other geopolitical issues have heightened supply concerns, said Greenberg.
“You’re just sort of seeing some of the geopolitical risk premium being built back into energy prices at a time when there’s a bit of concern for say, Saudi Arabia to meaningfully increase production,” he said.
In New York, the Nasdaq composite index ended down by 107.4 points, or 1.4%, at 7,630 as Netflix Inc., Amazon.com Inc. and Alphabet Inc., Google’s parent, also closed lower. The Dow Jones industrial average ended down by 144.2 points at 25,306.8 and the S&P 500 composite index closed down by 16.2 points at 2,802.6.
The Canadian dollar averaged US76.80¢, up by US0.24¢.
The December gold contract closed down by US$1.20 at US$1,231.50 an ounce and the September copper contract was down a penny at US$2.79 a pound.
CGI Group Inc. closed down 53¢, or 0.6%, at $82.91 after announcing its U.S. arm had been awarded a six-year cybersecurity contract from the U.S. government, worth a total of US$530 million. The contract builds on work that CGI Federal Inc. has already done to enhance the cybersecurity posture of agencies participating in a multi-year program overseen by the U.S. Department of Homeland Security.