S&P/TSX composite edges down as energy and base metal sectors move lower
The US stock market was mixed on Wednesday, with the major Canadian stock indices weighed down by losses in energy and base metals stocks.
Greg Taylor, chief investment officer at Purpose Investments, said the market appeared to be “waiting for the next big event” after some fairly quiet days.
“Many people are underinvested and wary of the market, and the market looks pretty resilient,” he said.
The S&P/TSX Composite Index was down 3.85 points to 20,680.83.
In New York, the Dow Jones Industrial Average fell 79.62 points to 33,897.01. The S&P 500 Index fell 0.35 points to 4,154.52 and the Nasdaq Composite Index rose 3.82 points to 12,157.23.
The UK reported earlier in the day that inflation remained above 10% for the seventh straight month, above the 9.8% forecast by economists.
Taylor said that may have been a factor before the market began to fall and recoup some of its losses.
“There was concern that the central bank would have to stay tough because inflation was strong,” he said.
Overall, the market is calling for a rate cut in the second half of the year, and if inflation remains high, it probably won’t happen.”
The Canadian dollar traded at 74.38 cents compared to 74.70 cents on Tuesday.
Crude oil contracts fell US$1.66 to US$79.24 per barrel in June, while natural gas contracts fell 14 cents to US$2.22 per mmBTU (million British Thermal Units) in May.
Oil traded below $80 a barrel on Wednesday, with Taylor saying a possible summer recession on the horizon and a slowdown in demand could weigh on prices and “keep them from going too far up.” Said to be high quality.
He predicted that prices would likely stay in the $70 to $80 per barrel range in the short term.
“It will be difficult to have a real breakout due to concerns about the upcoming slowdown in demand, and conversely, it doesn’t feel like a significant breakout as OPEC started saying they were going to. “We stand by this price,” Taylor said.
“I mean, it’s in that range. Oil has been pretty strong over the last few years, and the fact that it can stay at this level is still pretty good for (energy) companies.”
June gold contracts fell $12.40 to $2,007.30 per ounce and May copper contracts fell 1 cent to $4.08 per pound.
Gold and copper stocks have “pulled back a bit” reflecting “general weakness in some commodities,” Taylor said.
“But there is no real reason. Right now the market seems to be flatter than anything else,” he said.
This report by the Canadian Press was first published on April 19, 2023.