TORONTO — Canada's main stock index suffered a triple-digit loss Wednesday after a weak performance from the energy sector, the result of dropping oil prices as global supply of the commodity stabilizes.
Candice Bangsund, portfolio manager for Fiera Capital, said an impasse between OPEC plus countries that stifled production levels was reportedly being resolved, leading to a retreat in oil prices.
OPEC plus is a loose coalition of oil-producing countries that includes OPEC’s official members, as well as Russia, Malaysia and Mexico, among others.
“The downward move was amplified after U.S. government reports showed an expansion in gasoline stockpiles last week,” said Bangsund in a note.
The August crude oil contract was down US$2.12 at US$73.13 per barrel on Wednesday, and the August natural gas contract was down four cents at US$3.66 per mmBTU.
That led the S&P/TSX composite index to close down 123.41 points at 20,147.24. The market's energy index was down 3.55 points to 131.80.
The Canadian dollar traded for 80.02 cents US compared with 79.91 cents US on Tuesday.
Bangsund said financial stocks also had a tough day Wednesday after a pullback in bond yields that was sparked by comments from the U.S. Federal Reserve that the latest spike in inflation would be temporary.
"It eased inflation concerns and saw investors ratchet down their inflation expectations," said Bangsund.
In the U.S., she said high-performing tech stocks held up American markets, which were mixed at close.
In New York, the Dow Jones industrial average was up 44.44 points at 34,933.23. The S&P 500 index was up 5.09 points at 4,374.30, while the Nasdaq composite was down 32.701 points at 14,644.95.
Bangsund said there was an optimistic mood in U.S markets after Federal Reserve Chair Jerome Powell's remarks to Congress alleviated fears of an earlier-than-expected withdrawal of stimulus measures.
"He emphasized the transitory nature of the latest spike in prices, while reinforcing that it's premature to scale back stimulus given that the labour market recovery remains far from complete," said Bangsund.
"Investors welcomed this supportive message that ultimately made the case for maintaining highly-accommodative monetary policy in 2021."
She said gold also breached a four-week high following Powell's message of monetary support. The August gold contract was up US$15.10 at US$1,825.50 an ounce and the September copper contract was down four cents at US$4.27 a pound.
- By Salmaan Farooqui
This report by The Canadian Press was first published July 14, 2021.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
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