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After losing nearly one per cent last week, the TSX Composite Index again closed in the red Monday, November 22. The last four trading sessions have all resulted in losses, a combined total of 1.37 per cent.
While the financial sector shook off its hat-trick of loses, and energy too was up, the IT sector plummeted over three per cent and the health sector was down 2.64 per cent leading to the benchmark index dropping by 0.62 per cent, 134.26 points. It closed at 21,420.77 points as its biggest player Shopify’s SHOP stock found itself in the top laggers list, dropping 5.2 per cent.
The S&P/TSX Capped Information Technology Index has gained 25.24 per cent year-to-date and tech stocks are thought to be able to hedge against inflation, so you would think they would do well amid rising inflation. However, Monday also saw President Joe Biden, in a show of bipartisanship, renominate Republican Jerome Powell to head the Fed.
Mr. Powell was installed by former President Donald Trump; however, Mr. Biden condoned the job he’s done during the pandemic, keeping the economy lively by slashing interest rates. Now, however, inflation has surged and the Fed would look at dealing with it and so evidently, enthusiasm for tech stocks seems to have fallen. Needless to say, Mr. Powell will have his work cut out for him as he begins his second term by overseeing the rise in interest rates while trying to keep the economy buoyant, a delicate balancing act.
One-year price chart (November 22). Analysis by Kalkine Group
Volume active
Manulife Financial Corporation was for the third consecutive trading session the most traded stock with 10.65 million shares changing hands followed by Suncor Energy Inc that saw 10.23 million shares switch ownership. In third place was Canadian Natural Resources Limited with 8.94 million shares traded.
Movers and laggards
Nasdaq plummets after record high
Mr. Powell’s reinstallation came as a disappointment to many who are critical of the banks’ acknowledgment (or lack thereof) to climate change with regards to regulation but was also welcomed by players not wanting too much of a shake-up of the status quo. Given the bipartisan nature of the nomination, the Senate should easily confirm Mr. Powell.
Either way, after the news broke, the record tumbling rally of recent times among Wall Street indices came to a swift halt. The Nasdaq benchmark plummeted 1.26 per cent, a whopping 202.68 points to 15,854.76. The S&P 500 fell 0.32 per cent, 15.02 points to 4,682.94 while the Dow managed to close in the green if only just by 0.05 per cent, 17.27 points to 35,619.25.
Gold prices sink while oil regains
Gold continued its fall with its third straight trading session loss, down 2.45 per cent to US$ 1,806.30. Brent oil gained over one per cent to US$ 79.70/bbl, while crude oil rose by 0.85 per cent to US$ 76.75/bbl.
Loonie down
The loonie was down again, this time by 0.34 per cent while USD/CAD was up to 1.2698. The US Dollar Index grew 0.43 per cent against the basket of major currencies Monday and ended at 96.55.
Money market
Mr. Powell’s reappointment is bound to have an effect across the economy, and one of which may have been on the bond market. The US 10-year bond yield jumped 4.75 per cent Monday to 1.632 while the Canada 10-year bond yield saw a whopping 6.2 per cent rise to 1.764.
