S&P/TSX composite posts loss Wednesday despite energy gains, U.S. markets also lower

Losses in technology and battery metals helped lead Canada’s main stock index lower despite gains in energy Wednesday, while U.S. markets were also down.

Markets were mostly flat, but beneath the surface is a continuing sector rotation as investors start to broaden their interest in the wake of a narrow, tech-focused rally, said Greg Taylor, chief investment officer at Purpose Investments.

“If you want to see the market go higher, you need to have other sectors participate. That’s the goal,” he said.

The S&P/TSX composite index was down 48.19 points at 19,705.95.

In New York, the Dow Jones industrial average was down 102.35 points at 33,951.52. The S&P 500 index was down 23.02 points at 4,365.69, while the Nasdaq composite was down 165.10 points at 13,502.20.

The Nasdaq led losses on major indexes in the U.S., down 1.2 per cent. Some of the biggest semiconductor names were down Wednesday, said Taylor, but the overall market fared fine.

Among those companies were Intel Corp., which saw its stock drop six per cent Wednesday, while Advanced Micro Devices was down almost as much, and Qualcomm Inc. which was down more than three per cent.

These declines represent the fact that the sector had been getting a bit overbought, said Taylor.

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“People are starting to take some profits and move that towards some of the lagging sectors,” he said.

Investors were eyeing Federal Reserve chairman Jerome Powell as he spoke before a House committee Wednesday, but so far Powell has stuck to the script from the central bank’s last rate decision, said Taylor.

“(Powell was) still with the hawkish tone, talking a little bit more about further hikes this year,” said Taylor.

North of the border, retail sales in Canada grew 1.1 per cent in April.

“It’s a little higher than expected, which I think is probably positive news,” said Taylor, amid an ongoing “balancing act” between cooling inflation and maintaining some strength in the economy.

“We do want the economy to do well, but we also don’t want to get too hot, which would bring on further rate hikes.”

Meanwhile on the blockchain, bitcoin passed US$30,000 Wednesday. Taylor said the coin had a big run last week and is gaining strength amid some optimism regarding regulation in the sector.

The Canadian dollar traded for 75.86 cents US compared with 75.52 cents US on Tuesday.

Oil prices picked up amid some speculation on increased demand coming out of Asia, said Taylor. “As the other parts of the world start to reopen and pick up demand, that could help the broader commodity market.”

The August crude contract was up US$1.34 at US$72.53 per barrel and the July natural gas contract was up 11 cents at US$2.60 per mmBTU.

The August gold contract was down US$2.80 at US$1,944.90 an ounce and the July copper contract was up three cents at US$3.91 a pound.