Canada's main stock index dipped after a week of gains as a slip in base metals and technology outweighed another good day for energy shares.
The mini-slide marks a chance to seize on S&P/TSX stocks that have already jumped 31 per cent over the past 12 months, rather than signalling angst ahead of the Bank of Canada’s expected rate cut on Wednesday, said Andrew Buntain, a portfolio manager at Fiduciary Trust Canada.
“The Canadian market is still undervalued compared to the U.S., and a day like today could represent an opportunity if you have a keen eye for value,” he said, noting the S&P/TSX composite index outperformed the American S&P 500 last quarter — a rarity over the last 15 years.
The S&P/TSX composite index closed down 99.21 points at 24,723.33.
In New York, the Dow Jones industrial average fell 344.31 points to 42,931.60. The S&P 500 index was dropped 10.69 points to 5,853.98, while the Nasdaq composite rose 50.45 points to 18,540.01.
The Dow Jones and the S&P 500 both hit all-time highs on Friday, capping off the sixth straight winning week for the S&P 500, its longest streak so far this year. The S&P 500 has topped records 47 times this year, he said.
“We’re in all-time-high territory in Canada too,” said Buntain.
While information technology accounts for much of those gains amid the buzz over artificial intelligence, rising mining and energy shares can also take a lot of the credit.
Energy along with mining and metals account for 30 per cent of the S&P/TSX’s market capitalization, Buntain pointed out.
Geopolitical unrest as well as uncertainty around the outcome of the Nov. 5 presidential election in the U.S. have fuelled gains in some of Canada’s strong areas, such as natural resources, he said.
“Gold is sitting at an all-time high. Silver is at a 12-year high,” he said.
“People sometimes forget that when you have shooting wars in places like the Middle East and Eastern Europe that people traditionally flock to gold and silver and other precious metals as a store of value,” said Buntain.
While base metals inched down on Monday along with most other sectors in the S&P/TSX following big gains in recent weeks, energy stocks climbed a couple of points further.
This week, all eyes are on the Bank of Canada’s announcement Wednesday of a likely rate cut that many market watchers expect to be 50 basis points — doubling down on the three 25-basis-point cuts that kicked off in June.
Those projections draw partly on Statistics Canada’s report last week that topline inflation fell to 1.6 per cent in September, after landing on the Bank of Canada’s target of two per cent in August.
More than a dozen Canadian companies are set to report financial results this week along with 100-plus U.S. outfits, Buntain said.
“There’ll be a lot of attention focused on U.S. corporate earnings,” he said.
The latest monthly Canadian retail sales figures are also slated to drop Friday.
But it’s the run-up to the election south of the border that could stoke market volatility over the next two weeks.
“We do expect that between now and then, there will be a response as market watchers and market participants shift their bets,” Buntain said.
As with instability abroad, unease at home can fuel gains in investments considered safer at the moment, including energy and metals, he added.
“There’s only 10 trading days left before the U.S. election. That is coming up pretty fast.”
On Monday, the Canadian dollar traded for 72.28 cents US compared with 72.45 cents US on Friday.
The December crude oil contract was up US$1.35 at US$70.04 per barrel and the November natural gas contract was up five cents at US$2.31 per mmBTU.
The December gold contract was up US$8.90 at US$2,738.90 an ounce and the December copper contract was down three cents at US$4.36 a pound.
This report by The Canadian Press was first published Oct. 21, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Christopher Reynolds, The Canadian Press
