Canada’s main stock index fell after Monday’s mixed trading due to a downturn in energy and telecoms, while the US market rose as earnings season arrived.
The S&P/TSX Composite Index fell 35.28 points to 20,226.79.
In New York, the Dow Jones Industrial Average rose 76.32 points to $34,585.35. The S&P 500 Index rose 17.37 points to 4,522.79 and the Nasdaq Composite Index rose 131.25 points to 14,244.95.
South of the border, “everyone is gearing up for earnings season,” said Pierre-Benoit Gauthier, assistant vice president of investment strategy at IG Wealth Management.
Gauthier said US earnings got off to a strong start in the second quarter on Friday as major banks overturned low expectations set by investors and analysts.
“Expectations for the second quarter numbers are very low and I think people are looking at the U.S. economy not being as bad as feared, so expect some upside,” he said.
Gauthier said that optimism has helped boost U.S. stocks despite continued concerns about China’s economic growth or lack thereof.
China’s economy grew at a slower pace than expected in the second quarter of 2023, growing at an annualized rate of 6.3% compared to analysts’ expectations of 7%. The youth unemployment rate also rose to a record high of 21.3% in June.
Gauthier said this likely weighed on oil on Monday, which fell to nearly $74 a barrel after rising above $77 a barrel last week.
“This Chinese data definitely put a damper on that fire,” he said.
Gauthier said oil is being pulled in two directions as U.S. reserves are low and production continues to decline, even as global demand concerns weigh on prices. .
Energy stocks weighed on TSX on Monday’s turbulent day as oil prices fell and investors braced for the next inflation drop on Tuesday, less than a week after another Bank of Canada rate hike .
In the US, more earnings from the financial sector this week, especially the commentary that accompanies the earnings, will provide more insight into the consumer situation, Gauthier said.
“They know exactly what consumers are doing, so the results aren’t as important as the comments. It will be interesting to see that.”
The Canadian dollar fell to 75.83 cents on Friday against the US dollar of 75.86 cents.
The September crude contract fell by US$1.24 to US$74.08 per barrel, while the August natural gas contract fell by US$3 to US$2.51 per mmBTU.
August gold fell US$8.00 to US$1,956.40 an ounce, while September copper dropped US$9 cents to US$3.84 an ounce.
— with files from The Associated Press
© 2023 Canadian Press
