Canada’s main stock index closed lower following a major sell program from an unknown international dealer, while U.S. markets rose.
“From about 10:30 this morning, a big sell program came in internationally at one of the dealers,” said Dominique Barker, Portfolio Manager, CIBC Asset Management. “We don’t know which one, but the market has sold off, and the Canadian dollar also sold off from about that time. So, that’s impacting the Canadian market versus the rest of the world.”
The Toronto Stock Exchange’s S&P/TSX composite index closed down by 133.94 points at 16,286.30 in a broad-based decline following a selloff that hit most of the companies on the TSX 60 index. The index hit an intraday high of 16,494.09.
The S&P/TSX capped materials index declined the most, down 1.5%, while the health-care sector was the only index see gains with a 0.1% rise. Volume for the Toronto Stock Exchange (TSX), as a whole, came in at 338.23 million.
Lower volumes on the TSX may have made the selloff have an outsized impact, Barker said: “This is summer volume time as well, so you tend to have a little bit less volume, so something like that could have a larger impact on the day.”
The dip in the TSX comes in the midst of what has generally been quite a positive earnings season, said Barker: “Earnings reporting has exceeded expectations generally, the economy is very strong.”
The source of the selloff is unclear, but it comes after Saudi Arabia has responded forcefully through economic and political means to criticism from Canada’s Global Affairs Ministry about the arrest and detention of two female bloggers and activists in the kingdom.
Saudi Arabia has declared a freeze on new trade with Canada and recalled thousands of students attending Canadian universities following the tweet last week from Global Affairs Canada.
The Saudi foreign ministry has also ordered Canada’s ambassador, Dennis Horak, to leave the country. Saudia Airlines has also announced it will suspend flights to and from Canada starting Aug. 13.
SNC-Lavalin Group Inc., which has a major presence in Saudi Arabia, closed down by $1.97, or 3.5%, at $54.56. The company issued a statement saying it greatly values its contributions to Saudi Arabia during the past five decades, declining further comment.
The Canadian dollar also took a sharp drop in the later half of the day to average US76.79¢, down by 0.23 of a U.S. cent.
The strength of the U.S. dollar also played a role on the shift in the currency, said Barker.
Stock performance in Toronto was in contrast to New York, where the Dow Jones industrial average closed up by 126.73 points at 25,628.91. The S&P 500 index ended up by 8.05 at 2,858.45 and the Nasdaq composite index was up by 23.99 points at 7,883.66.
The September crude contract closed up by 39¢ at US$68.33 a barrel and the September natural gas contract was up by US4¢ at US$2.90 per mmBTU.
The December gold contract closed up by US60¢ at US$1,218.30 an ounce and the September copper contract ended down US2¢ at US$2.75 a pound.