TORONTO — Canada’s main stock index sank Wednesday, pulled down by the energy and financial sectors as mounting apprehensions over the global banking sector spread, while U.S. markets were mixed as the tech sector held its own.
The S&P/TSX composite index was down 315.32 points, or 1.6 per cent, at 19,378.84.
In New York, the Dow Jones industrial average was down 280.83 points at 31,874.57.The S&P 500 index was down 27.36 points at 3,891.93,while the Nasdaq composite was up 5.90 points at 11,434.05.
Dragging markets down again Wednesday after Tuesday’s rally is more concern about the financial system, said Anish Chopra, managing director with Portfolio Management Corp.
These latest fears were sparked by the woes of the embattled Credit Suisse, shares of which tanked Wednesday after the bank reported it had identified “material weaknesses” in the firm’s internal controls on financial reporting, and the bank’s biggest shareholder said it would not put any more money into the Swiss lender.
“Investors aren’t in the mood for more issues around big financial services companies,”said Chopra.
The Credit Suisse news has added a new wrinkle to the worries caused by the recent closures of Silicon Valley Bank and Signature Bank in the U.S., said Angelo Kourkafas, an investment strategist at Edward Jones, though he noted Credit Suisse has been having issues for a while now and this is just the most recent development.
Kourkafas said concerns of an economic slowdown, which had been waning in recent weeks amid hope that a soft landing was possible, have reared their heads again. He thinks a mild recession was always likely, but agreed it’s becoming even more likely in the current environment.
Amid continuing decline in financial stocks, the Nasdaq held its own on increasing confidence that the Federal Reserve will soon pause interest rate hikes, Chopra said.
Meanwhile, new data shows U.S. retail sales fell a little in February, as did producer prices, said Chopra.
The Federal Reserve has a lot to chew on at its upcoming rate decision next week, said Kourkafas.
The Canadian dollar traded for 72.58 cents US, compared with 73.12 cents US on Tuesday.
The TSX’s energy index fell 5.4 per cent Wednesday.
Oil, too, has been hit by concerns about a global economic slowdown, said Kourkafas, sending prices down for several days in a row and reaching below US$70 Wednesday.
“The China reopening continues to be supportive, but now there is global concerns related to the banks and I think that’s weighing on what is typically a very sensitive-to-the-cycle commodities sector,” Kourkafas said.
The April crude contract was down US$3.72 at US$67.61 per barrel and the April natural gas contract was down 13 cents at US$2.44 per mmBTU.
The April gold contract was up US$20.40 at US$1,931.30 an ounceand the May copper contract was down 16 cents at US$3.84 a pound.
— With files from Associated Press
This report by The Canadian Press was first published March 15, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Rosa Saba, The Canadian Press