Rallying oil prices and a rising energy sector weren’t enough to keep Canada’s main stock index out of the red Thursday, as U.S. stocks mostly closed higher amid a pullback in bond yields.
The S&P/TSX composite index was down 15.84 points to 15,508.17, in a largely broad-based decline that included the influential gold and financials sectors.
Investors were relieved to see the yield on U.S. 10-year Treasury notes fall to 2.92% from Wednesday, when it climbed to 2.95% — the highest level since January 2014. Higher yields generally hurt stock prices by making bonds more appealing to investors.
The spike in bond yields Wednesday came after the Federal Reserve’s minutes from its January policy meeting showed bullish sentiment among policy-makers, confirming their intention to raise interest rates this year.
In New York, the Dow Jones industrial average was up 164.70 points to 24,962.48. The S&P 500 index added 2.63 points to 2,703.96 and the Nasdaq composite index was down 8.14 points to 7,210.09.
“For the most part we’re seeing a lot of renewed appetite for risk,” said Candice Bangsund, a vice-president and portfolio manager at Fiera Capital in Montreal.
“A lot of that was that bond yields did come off today, particularly after the strong back up we saw earlier this week. So I think there was a little bit of relief for the equity markets.”
In currency markets, the loonie continued its flight south as the Canadian dollar closed at an average trading value of US78.68¢, down 0.24 of a U.S. cent. The currency is down more than a penny so far this week.
“We saw weakness on the back of the weaker-than-expected retail sales report, so the Canadian dollar fell on that news,” said Bangsund.
Statistics Canada reported Thursday that retail sales fell 0.8% in December to $49.6 billion, as gains in new car sales were more than offset by lower sales at electronics and appliance stores and general merchandise retailers.
On the Canadian corporate front, shares of Loblaw Companies Ltd. were down $1.15, or 1.76%, to $64.16 after the grocer reported a drop in its fourth-quarter profit due to a $189-million charge related to the announcement of its PC Optimum loyalty rewards program and the fallout from its admission of participation in an alleged industry-wide price-fixing conspiracy.
Meanwhile, the Canadian Imperial Bank of Commerce kicked off banks’ earnings season after it reported first-quarter net income of $1.33 million — down 5.6% from the same period a year ago but up more than 22% on an adjusted basis, beating expectations.
In commodities news, the April crude contract climbed US$1.09 to US$62.77 per barrel and the April natural gas contract was down US1¢ at US$2.68 per mmBTU.
The April gold contract added 60¢ to US$1,332.70 an ounce and the March copper contract was up US3¢ at US$3.24 a pound.
With a file from The Associated Press