Canada’s benchmark stock index fell three digits on Thursday as investors became increasingly concerned about an impending recession and reacted to negative news about the gains of two major US financial services companies.
The S & P / TSX Composite Index closed 286.13 points below, or 1.54 percent, at 18,329.06.
New York markets were mixed, but the top three indices finally closed their intraday lows. The S&P 500 finished 0.30% lower, the Dow lost 0.46% and the Nasdaq ended in positive territory with a gain of 0.03%.
Wall Street banks ’earnings began to rise on Thursday and they took a look at their view of the outlook for the US economy.
JPMorgan Chase & Co. suspended share repurchase and earnings fell below second-quarter estimates. CEO Jamie Dimon said the bank needed to increase its capital reserve to prepare for a number of possible economic scenarios.
This warning shook the shares of Canadian banks. TSX’s financial subsector was the biggest friction in the index on Thursday.
“What we want to see, in this earnings season, is the extent to which any kind of economic slowdown is manifesting in real earnings. And the extent to which, from a U.S. perspective, of course, the strength of the dollar is affecting gains, “Diana Avigdor, portfolio manager and chief trading officer of Barometer Capital Management, said in an interview Thursday.
“We need to see what the rate hike will make in demand for loans, demand for mortgages, housing and that sort of thing, in order to fully assess it. However, Canadian banks are known to be fairly stable, as dividend payers and markets are now looking for, or investors are looking for, a safer trade. “
On Thursday, cannabis stocks fought against the broader market direction. Tilray Brands Inc., Aurora Cannabis Inc. and Canopy Growth Corp. they were among the best performing companies on the TSX.
Marijuana stocks rose after U.S. Senate Democrats planned to introduce a bill into a bill to decriminalize marijuana federally, though the legislation faces a difficult path to pass through ‘a divided room.
Organigram Holdings Inc. reported that its third-quarter gross revenue increased 90% in its last quarter compared to a year ago, although it still recorded a loss of $ 2.8 million. The company said new products and improved sales momentum helped increase its top line. Shares closed a penny higher Thursday at $ 1.39.
The reference WTI crude sank $ 0.52 to settle at $ 95.78 per barrel. Earlier in the day, oil fell to $ 91.86 a barrel, the lowest level since Russia’s invasion of Ukraine.
Eric Theoret, global macro strategist at Manulife Investment Management, said lower crude oil prices are an important component to the Bank of Canada’s path to reducing inflation.
“Central banks have hardened, growth is expected to slow and commodities are adjusting, so I think all of this is part of the process that central banks are trying to achieve to reduce inflation and a key component of this is the price of energy. ”Theoret said in an interview Thursday.
“Crude oil weakness is really desired by central banks right now, given how important it has been for this latest rise in inflation that we have been seeing in the overall figures.”
Theoret added that as the central bank begins to control inflation, both the materials and energy sectors will begin to weaken.
“Canada is starting to suffer and you just have to look at the currency to see, you know, that this weakness really materializes,” he said.
The Canadian dollar ended lower at 76.30 US cents on Thursday.