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The free fall of US stocks jolted Canadian markets as well. The TSX Composite Index slipped below 18,000, which acts as the psychological support level for traders betting long on Canadian equities. However, bulls were able to take the market above 18,000 and at the closing, the index settled ~195 points or 1.06% lower at 18,125.72.
5-day Price Chart, TSX Composite Index (as on March 04, 2021). Source: EODHD/Others (Thomson Reuters)
The US 10-year bond yield is playing crucial role in setting the market direction.
On Wednesday, the bond yield again spiked by approximately 5% to 1.557%. It has increased by more than 10% over the past two trading sessions.
The higher yield will hurt equity valuation. The valuation across the board needs to be readjusted if yield continues to move higher.
Over the last one-year, the US pumped up the printing of currency and issued a humongous amount of debt that is now hurting the yield. There is a high expectation of rise in inflation, which will lead to an upcurve in inflationary pressure interest rate. This will eventually cause the interest rates to increase, and new issue will carry a higher rate of interest. This is why money managers are dumping past issues at a discount, which can drive a sharp rally in the yield.
Movers and Laggards on TSX Composite
|
Ticker |
Company Name |
1-day Change (%) |
|
Top-5 Gainers |
||
|
MEG |
MEG Energy Corp |
9.9% |
|
PXT |
Parex Resources Inc |
5.9% |
|
VET |
Vermilion Energy Inc |
5.6% |
|
CVE |
Cenovus Energy Inc |
5.0% |
|
MTL |
Mullen Group Ltd |
4.8% |
|
Top-5 Laggards |
||
|
KXS |
Kinaxis Inc |
-17.0% |
|
LSPD |
Lightspeed POS Inc |
-9.1% |
|
APHA |
Aphria Inc |
-8.2% |
|
HBM.TO |
Hudbay Minerals Inc |
-7.7% |
|
BLDP.TO |
Ballard Power Systems Inc |
-7.4% |
Source: EODHD/Others (Thomson Reuters)
Volume Movers: Bombardier Inc. was the most actively traded stock on Wednesday with 20.71 million shares exchanging hands and closed 8.3% higher to C$0.65. Suncor Energy Inc. and Cenovus Energy Inc. followed next, with traded volume of 17.28m and 13.78m, respectively.
Commodity and Currency Update
Gold tested a nine-month low and is heading for the third consecutive weeks of negative close as US Fed Chief Jerome Powell disappointed traders with his view on US Bond Yield, pushing both the dollar and bond yields up.
Gold traded 0.88% lower at US$1,700/oz and tested a day low of US$1,687/oz.
Energy prices moved higher for the second straight day, with international oil benchmark Brent Oil surged 4.17% to US$66.74/bbl and American International Crude WTI traded 4.16% higher to US$63.83/bbl.
