North American markets ended the trading day in the red, with Canada’s main stock index down more than 150 points and the US stock market also falling.
S&P /TSX The composite index fell 165.98 points to 19,560.16 points, as the energy sector lost money due to falling oil prices.
Oil prices fell on fears of a marked global slowdown and worsening of its potential impact on global energy demand.
In New York, the Dow Jones Industrial Average fell 173.27 points to 30,961.82. The S&P 500 index fell 44.66 points to 3,901.35, while the Nasdaq composite fell 167.32 points to 11,552.36.
Energy sector lifts S&P/TSX composite, US stock market ends day higher
US markets fell even as retail sales data delivered was stronger than expected and unemployment cases fell for a fifth week.
“While the reports provide an upbeat assessment of the U.S. economy, they also indicate that policymakers have more work to do,” said Candice Bangsund, portfolio manager at Fiera Capital. cooling down the economy and curbing inflation”.
The bond market was also under pressure as investors raised their bets for the US Federal Reserve to be more aggressive next week, sending bond yields higher and prices lower on the day.
Many expected the central bank to raise the key interest rate by 3/4 percentage point at its upcoming meeting, but the rate of a full percentage point increase rose after the latest news on inflation. disappointed traders on Tuesday.
Going forward, equity markets remain vulnerable to volatility and downside as investors gauge valuations amid tighter monetary policy as well as the impact on economic growth, Bangsund said. growth and income,” Bangsund said.
Bangsund also said central banks’ unwavering commitment to curbing inflation will ultimately limit equity returns.
“We expect another pullback in this bear market, given the earnings dependency of the equation,” she added.
“Earnings expectations have yet to be adjusted to reflect the looming recession or even recession risk, and a physical drop could set the stage for the next phase of this bear market.” .”
The bond market is also vulnerable to further losses, with central bank tightening, soaring inflation and quantitative tightening likely to put upward pressure on bond yields, according to Bangsund.
She said a traditional 60/40 portfolio is unlikely to meet investor goals due to lower returns for public stocks, while traditional bonds may no longer act as a shock absorber.
“As a result, a well-balanced portfolio would need higher allocations to private market asset classes such as private credit and real assets to make up for these shortfalls in the market,” she said. public”.
The October crude oil contract fell $3.38 to $85.10 a barrel and the October natural gas contract fell 79 cents at $8.32/mmBTU.
The gold contract for December delivery was down $31.80 at $1,677.30 an ounce and the December contract was down 3 cents at $3.49 a pound.
The Canadian dollar traded for 75.76 US cents versus 75.95 US cents on Wednesday.
© 2022 Canadian Press