Markets go down, tech stocks fall

Canada’s main stock index fell more than 90 points on Tuesday, led by losses in the technology sector as U.S. markets also fell.

The S&P/TSX Composite Index lost 90.87 points to 19,578.30. The largest losses were recorded in the technology sector, which lost 4.08% at the end of the session, as well as in the health care sector, which lost 7.92% on Tuesday.

In New York, markets also fell as disappointing results weighed on tech and travel companies. The Dow Jones industrial average fell 58.13 points to 32,774.41. The S&P 500 index fell 17.59 points to 4,122.47, while the Nasdaq composite fell 150.53 points to 12,493.93.

Investors are concerned about the new report on US consumer price index (CPI) data, which is due out on Wednesday and will show how inflation has risen in the United States during the month of July. , said Pierre Cleroux, chief economist of the Development Bank. from Canada.

“There’s a lot of concern about that,” Cleroux said. “I think that’s why the market lost momentum. The market has been up for 30 days, but I think that worry about inflation is slowing the market down.”

While investors are hoping for an underlying inflation reading showing that U.S. inflation has already peaked, Cleroux said he thinks that’s unlikely.

“I’m not sure we’ll see that tomorrow, I think the inflation numbers are going to be high,” he said. “I think it’s going to take a bit longer before inflation comes down.”

This week’s US inflation data will follow a surprisingly hot US jobs report released last week. While Canada actually lost 31,000 jobs in July, the United States added 528,000 jobs during the month, more than double the 250,000 economists had expected.

The rapid pace of job growth south of the border is why a majority of analysts now expect the U.S. Federal Reserve to announce a 75 basis point interest rate hike during from its September meeting, likely followed by at least two more smaller increases.

Fears that central banks will be too aggressive in their rate hikes and trigger a major recession are one of the reasons riskier growth stocks like technology are hurt.

But while recession is a scary word, Cleroux said, he doesn’t anticipate a big one. He said that while interest rate hikes will slow growth, it is necessary in the face of clear signs of an overheating economy.

“You can have a small negative growth, and you would call it a recession, but it won’t be much different than if you have a small positive growth,” he said. “That’s basically what I expect for the Canadian economy.”

Energy stocks edged higher on Tuesday as the price of oil continued to fluctuate around the US$90 mark, after dipping slightly last week. Cleroux said he expects the price of oil to remain high due to years of underinvestment in the energy sector and growing global population growth which is driving increased demand.

And while higher gasoline and home heating prices can be hard on consumers, they also add significantly to Canada’s GDP.

“It’s actually good for Canada because we produce a lot of (oil),” Cleroux said. “Twenty percent of everything we export is oil-related, so when the price of oil is at $90, it’s good for the Canadian economy.”

The Canadian dollar was trading at 77.64 cents US against 77.78 cents US on Monday.

The September crude contract was down 26 cents at US$90.50 a barrel and the September natural gas contract was up 24 cents at US$7.83.

The December gold contract was up US$7.10 at US$1,812.30 an ounce and the September copper contract was down less than a cent at US$3.59 a pound .

Notable Canadian company stock moves on Tuesday included Recipe Unlimited Corp., which jumped more than 45% on news that majority shareholder Fairfax Financial Holdings Ltd. offered to take the company private in a deal that values ​​the restaurant chain at $1.2 billion.

This report from The Canadian Press was first published on August 9, 2022.

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