TSX technical issues raise confidence question

TORONTO — Canada’s main stock index fell in the first trading day after a technical problem shut down the Toronto Stock Exchange early at the end of last week, with one analyst noting the disruption raised some questions about the reliability of the exchange.

The S&P/TSX composite index fell 61.05 points to 15,607.88.

Last Friday, a hardware failure forced the Canadian market to end the trading day early after both the primary and redundant components were affected, the TMX Group said. The problem also affected the TSX Venture Exchange, the TSX Alpha Exchange and the Montreal Exchange.

But it’s unlikely there’s been a structural impact to the market, aside from some possible catch-up trading on Monday, said Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis.

Instead, the reaction mainly involves questions around whether appropriate safeguards are in place to ensure a shut down won’t recur, he said.

“I think it’s much more just around the confidence that this type of issue isn’t going to happen again as we become a more electronic world, certainly a more electronic market,” he said.

“I think there’s always questions around what the potential is for disruptions.”

The TMX is committed to applying the lessons it learned from the Friday disruption to help it prevent future recurrences, said TMX CEO Lou Eccleston in a statement released Saturday.

In New York, major indexes also dipped after starting out the day higher. The Dow Jones industrial average dropped 148.04 points to 24,163.15, the S&P 500 index lost 21.86 points to 2,648.05 and the Nasdaq index declined by 53.53 points to 7,066.27.

The markets started off reacting to an ongoing positive earnings season, in particular McDonald’s reporting higher profit and revenue than analysts expected.

The market periodically focuses on such strong fundamentals, Fehr said, and sometimes on some of the risk factors, including ongoing concerns about U.S. trade policy.

On Monday, both of those reactions occurred in the same day, he said.

The Canadian dollar was trading at 77.91 cents US, up 0.13 of a US cent.

The June crude contract gained 47 cents to US$68.57 per barrel and the June natural gas contract shed about a penny to US$2.76 per mmBTU. The June gold contract dropped US$4.20 to US$1,319.20 an ounce and the July copper contract rose about half a cent to US$3.07 a pound.