S&P/TSX Composite Index Declines as U.S. Markets Follow Suit

TORONTO — Canada’s primary stock index fell on Monday, driven by declines in technology and utilities sectors, with U.S. markets also experiencing downturns.

The S&P/TSX composite index ended the day down 66.38 points, settling at 25,625.42.

In the United States, the Dow Jones industrial average decreased by 240.59 points to reach 44,401.93. The S&P 500 index fell 37.42 points, closing at 6,052.85, while the Nasdaq composite dropped 123.08 points to finish at 19,736.69.

Michael Currie, a senior investment adviser at TD Wealth, noted that the trading day began on a positive note but consistently moved downward.

Currie attributed the market shifts in part to two significant news events from China. He explained, “The (Chinese) central bank announced it is starting to purchase gold again and is considering easing its monetary policy, which positively impacted oil and gold prices.”

However, China also initiated an investigation into semiconductor company Nvidia for potential anti-monopoly violations, which contributed to a decline in its stock price, which fell 2.6 percent to US$138.81.

“Primarily, it’s about interest rates today,” Currie added.

Investors in the U.S. are waiting for an inflation update later this week. Though there are concerns about a slowing job market, this data is not expected to alter the projected quarter-percentage-point cut from the U.S. Federal Reserve next week. Currie stated, “Unless something unusually significant comes from the inflation numbers, we don’t expect any changes from the Fed.”

In Canada, the central bank is preparing for a rate decision expected on Wednesday. Currie believes that there is a greater chance of a half-point cut following last week’s jobs report, which revealed an increase in the unemployment rate to 6.8 percent in November.

“The greater frequency of cuts, especially compared to the U.S., is putting further pressure on our dollar,” said Currie, while suggesting there will be increased discussions about the growing gap between Canadian and U.S. interest rates, which could weaken the Canadian dollar further.

Despite the decline, Currie noted that the TSX had briefly reached an all-time high earlier that day, remarking, “Since the U.S. election, it’s been a continuous rally.”

As for currency exchange, the Canadian dollar was valued at 70.77 cents against the U.S. dollar, slightly up from 70.74 cents on Friday.

On the commodities market, the January crude oil contract rose by US$1.17, reaching US$68.37 per barrel. The January natural gas contract increased by 11 cents, arriving at US$3.18 per mmBTU. Meanwhile, the February gold contract gained US$26.20, closing at US$2,685.80 per ounce, and the March copper contract advanced by eight cents to US$4.28 per pound.

This report compiles insights from various financial sources and is a summary of the movements within financial indices on Monday.

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