Canada’s main stock index rose on Wednesday amid gains in resource stocks, while U.S. markets lost ground.
“Markets both in Canada and the U.S. experienced pretty notable sector and style rotations characterized by a shift away from some of the higher growth technology that had led the way in the previous year, toward more defensive or commodity-linked sectors,” said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management.
Oil prices have been rallying recently after protests swept Iran, which is a member of the OPEC group that helps set crude prices. The protests could lead to disruptions in production and squeeze supplies of crude.
The March crude oil contract was up 95 cents US at US$61.88 per barrel.
Burkett said Canada’s energy sector had also moved in reaction to U.S. actions against Venezuela, which produces similar types of crude as Canada. Shares of Canada’s largest energy producers fell in the aftermath of the U.S. raid earlier this month, but rose on Wednesday.
“Some of it is a reaction to what’s been a more tepid response from the U.S. energy sector getting into Venezuela and investing there to bring more production online,” Burkett said.
Meanwhile, the Canadian tech sector fell, weighed down by Shopify Inc. shares that lost 5.94% on the day.
“There’s a sense that the macro picture is worsening, and I think for businesses like Shopify, which I would call e-commerce infrastructure category businesses that are heavily activity dependent, there are concerns as to whether Shopify is really in a position to capture more revenues and earnings upside,” Burkett said.
The S&P/TSX composite index was up 46.11 points at 32,916.47.
In New York, the Dow Jones industrial average was down 42.36 points at 49,149.63. The S&P 500 index was down 37.14 points at 6,926.60, while the Nasdaq composite was down 238.12 points at 23,471.75.
U.S. stock indices fell following profit reports from several big banks.
Wells Fargo helped pull the market lower after falling 4.6%. The San Francisco-based bank reported weaker profit and revenue for the latest quarter than expected, with analysts citing lower trading fees and other miscellaneous items.
Bank of America fell 3.8% despite reporting a stronger profit than analysts expected, with some consternation about the size of its upcoming expenses. Citigroup, which is in the midst of a turnaround under CEO Jane Fraser, fell 3.3% following its own profit report.
“The reason that we see Bank of America down today … is cost concerns,” Burkett said.
“Whether their core business revenues can increase at the pace that they have in the post-COVID-19 period, we’re starting to see the macro outlook worsen, and so as costs continue to rise, there’s concern around whether the profitability of that bank can continue to improve.”
The heaviest weights on the market were tech stocks, which gave back a bit of their huge gains from recent years created by the frenzy around artificial intelligence. Such stellar performances caused some critics to say their stock prices had become too expensive.
Nvidia fell 1.4%, and Broadcom sank 4.2%.
The Canadian dollar traded for 72.06 cents US compared with 72.01 cents US on Tuesday.
The February gold contract was up US$36.60 at US$4,635.70 an ounce.
— With files from The Associated Press