TORONTO — Geopolitical worries dominated North American stock markets on Thursday, as they began to slide in the followingnoon when media reported that the United States would have authorized the Baltic countries members of the NATO to ship US weapons to Ukraine to help repel a possible Russian incursion.
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Stock markets were on track to recoup their steep losses from Wednesday, with the Nasdaq Composite Index even looking set to recover from a technical correction, when everything changed around 2:15 p.m.
“It kind of took the breath away from the market,” observed Mike Archibald, vice-president and portfolio manager at AGF Investments.
In a context of heightened market volatility, geopolitical headlines are not helping, “especially given the jitters” at the start of the year.
“It is clear that a war will not be good for anyone. But I think it’s mostly uncertainty regarding what it may mean for the future,” he said in an interview.
“Will the United States impose more sanctions on Russia? What will be Russia’s response to these potential sanctions? There’s a fair amount of unknowns around this particular situation, so I think that’s what’s scaring the broader market right now.”
The Toronto Stock Exchange’s S&P/TSX Composite Index closed down 146.98 points, at 21,058.18 points, following posting a gain of around 165 points earlier in the day.
The major US indices have followed similar trajectories. The Dow Jones Industrial Average returned 313.26 points to 34,715.39 points following earlier showing a gain of nearly 462 points.
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The S&P 500 index rose 50.03 points to 4482.73 points, while the Nasdaq Composite Index, which climbed 2.1% earlier, fell 186.24 points, or 1, 3%, to 14,154.02 points.
Archibald pointed to market sentiment starting the day strong, buoyed by news that China is cutting prime rates in its first easing measure since April 2020. Bond yields also fell slightly. from their high levels on Wednesday.
“Both of these have provided some relief to growth areas of the market,” he explained.
The tech sector, in particular, initially strengthened to propel the Nasdaq, while the Canadian tech sector was helped by gains in Shopify and Lightspeed Commerce in early trading.
In addition, the number of weekly new claims for EI benefits in the United States reached its highest level in three months due to the Omicron variant, which eased concerns that the United States Federal Reserve raise interest rates next week.
The massive divestment of the followingnoon allowed only two of the eleven sectors of the Toronto trading floor – those of industry and utilities – to end the day up slightly.
On the New York Commodities Exchange, crude oil fell 25 cents US to US$85.55 a barrel and natural gas fell 19.6 cents US to US$3.65 a barrel. million BTUs.
The price of gold fell 60 cents US to US$1842.60 an ounce and that of copper grabbed 11.25 cents US to US$4.58 a pound.
In the currency market, the Canadian dollar traded at an average rate of 80.17 cents US, up from 80.05 cents US the day before.
The Canadian Press
