Disappointing earnings and falling commodity prices had both Canada’s main stock index and U.S. markets closing lower Thursday.
The lower-than-expected earnings mostly came from U.S. stocks, but the downward pressure also had a knock-on effect on the Toronto Stock Exchange (TSX), said Candice Bangsund, vice president and portfolio manager at Fiera Capital Corp.
“Both the U.S. and Canadian markets are marginally down, and this has been a result of some disappointing earnings in the technology and consumer space, which is really driving the US. equity market underperformance versus the TSX.”
The S&P/TSX composite index closed down 75.55 points at 15,454.42 as all sectors outside of energy and metals were down.
Energy stocks still saw modest gains as the sector continued to see momentum from elevated crude prices, after lagging the market for some time, said Bangsund.
“Energy shares have largely lagged the rally in commodity prices that we’ve seen in the last year. And what we’re seeing here essentially, in the month of April, is that energy companies are finally catching up and benefiting from the rising crude prices.”
In New York, the Dow Jones industrial average ended down 83.18 points at 24,664.89. The S&P 500 index closed down 15.51 points at 2,693.13 and the Nasdaq composite index was down 57.18 points at 7,238.06.
While there was no major news pushing markets lower, heightened expectations for U.S. earnings weighed on the indexes, said Bangsund.
“I think it’s mainly a story of expectations being maybe a little too aggressive, and if these companies come in a little on the softer side, that does result in a bit of a pullback these days.”
The Canadian dollar averaged US79.16¢, down 0.12 of a U.S. cent a day after the Bank of Canada kept benchmark rates unchanged.
“Really the story in currencies today is one of U.S. strength,” said Bangsund.
“You’ve got bond yields backing up, and that’s really been driving the US dollar higher, and accordingly pulling the Canadian dollar lower, particularly as interest rates between the U.S. and Canada widen.”
The June crude contract closed down US14¢ at US$68.33 per barrel and the May natural gas contract was down US8¢ at US$2.66 per mmBTU.
The June gold contract ended down US$4.70 at US$1,348.80 an ounce and the May copper contract was down US3¢ at US$3.13 a pound.