TSX sags on broad-based decline
Dow plummets by 602.12 points
TORONTO — North American markets started the week by closing lower on a broad-based decline led by the tech sector, while oil losses stretched to an 11th day.
The rebound after October’s selloff lost steam Monday as some of the highest performing names from earlier in the year are becoming the laggards approaching the end of the year, says Craig Fehr, Canadian markets strategist for Edward Jones.
Some of the world’s largest technology companies, including Amazon and Microsoft, suffered losses on the day as Apple Inc. closed down five per cent.
Apple shares fell after Lumentum, a California company that makes facial recognition technology that is used in Apple’s iPhones, said it was cutting its sales forecast for its 2019 fiscal second quarter due to what it called a “customer development.”
Fehr said the selloff isn’t a signal of broader economic or market issues that could drive further losses.
“I would look at today’s downdraft as probably not necessarily the canary in the coal mine for something much worse to come from an economic or market level,” he said in an interview.
But he warned there isn’t an end in sight for recent market volatility.
“I think we’re going to get more of these bigger swings in the market as optimism pops back in to capture opportunities and then pessimism swings back in either to just take profits or to really focus on a narrow set of risks in the market.”
The S&P/TSX composite index closed down 118.04 points to 15156.40 after hitting a high of 15263.74.
Most sectors lost ground, led by health care and technology along with key materials, energy and industrial stocks. Defensive sectors such as real estate, telecommunications and utilities closed higher.
The performance of the industrials sector is a reflection of being in the later stages of the bull run along with an undercurrent about global trade worries and what that means for overall global growth, Fehr said.
In New York, U.S. markets lost between two and nearly three per cent. The Dow Jones industrial average was down 602.12 points or 2.3 per cent to 25387.18. The S&P 500 index was down 54.79 points at 2726.22, while the Nasdaq composite closed off 2.78 per cent or 206.03 points to 7200.87.
The December crude contract was down 26 cents at $59.93 US per barrel and the December natural gas contract was up 6.9 cents at $3.79 US per mmBTU.
Oil prices again lost ground despite some signals from Saudi Arabia that OPEC might cut production by about one million barrels a day. That prompted a reaction from U.S. President Donald Trump, who tweeted that he hopes that doesn’t happen: “Oil prices should be much lower based on supply!” he wrote.
Fehr said supply pressure and concerns about global demand produce a headwind to oil prices.
“We could see a reflex in global growth that could prompt slightly higher oil prices, but I would say oil is certainly facing plenty of headwinds when you look at that supply and demand dynamic.”
The December gold contract was down $5.10 at $1,203.50 US an ounce and the December copper contract was down 0.8 of a cent at $2.68 US a pound.