Canada’s main stock index lost more than 1.5 per cent Friday on broad-based weakness led by financials and technology, as U.S. markets fell after a major bank had its assets seized by the government.
The S&P/TSX composite index was down 311.80 points at 19,774.92.
In New York, the Dow Jones industrial average was down 345.22 points at 31,909.64. The S&P 500 index was down 56.73 points, or almost 1.5 per cent, at 3,861.59, while the Nasdaq composite was down 199.47 points, or 1.8 per cent, at 11,138.89.
For the second day in a row, the financial sector dragged markets down in Canada and the U.S. over concerns about the financial system, said Angelo Kourkafas, an investment strategist at Edward Jones.
“Clearly that’s where the source of the weakness is as the market reflects some worries about … the financial system,” he said.
It didn’t help that Friday’s big headline was the downfall of Silicon Valley Bank, which was closed by a financial regulator and is one of the largest U.S. banks to fail since the 2008 financial crisis.
While investors shouldn’t be too worried about other large banks as Silicon Valley Bank was very concentrated on the tech sector, Kourkafas said the news highlights the continued effects of the Federal Reserve’s fight against inflation.
Tech was also down Friday, with the Nasdaq falling 1.8 per cent as part of Friday’s slump.
New jobs data for February in the U.S. was mixed, with the number of new jobs still above expectations but not to the outsized extent that shocked investors in January, while there was some encouraging data around wage growth, hours and unemployment, said Kourkafas.
“There are some signs of potential softening,” he said.
Canada’s February employment data was a little different, with a strong report highlighting just how conditional the Bank of Canada’s interest rate pause is, said Kourkafas. Wage growth, a key figure eyed by the Bank of Canada for its rate hike decisions, was 5.4 per cent, up from 4.5 per cent in January.
The TSX lost almost four per cent this week from last Friday’s close.
The Canadian dollar traded for 72.43 cents US compared with 72.52 cents US on Thursday.
The April crude contract was up 96 cents at US$76.68 per barrel and the April natural gas contract was down 11 cents at US$2.43 per mmBTU.
The April gold contract was up US$32.60 at US$1,867.20 an ounce and the May copper contract was down less than a penny at US$4.03 a pound.
This report by The Canadian Press was first published March 10, 2023.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)
Rosa Saba, The Canadian Press