Canada’s main stock index rose to a record high on Tuesday as gains for technology shares, led by e-commerce company Shopify Inc, offset pressure on resource shares due to a stronger U.S. dollar. Major Wall Street indexes closed lower, with investors booking some profits from a post-election rally and nervously watching a further rise in bond yields.
The S&P/TSX composite index ended up 133.73 points, or 0.5%, at 24,923.01, eclipsing the record closing high it notched last Thursday.
Shares of Shopify jumped 21.4% after the company forecast fourth-quarter sales growth above estimates as a focus on employing AI-powered tools in its e-commerce services pulled in more merchants ahead of the crucial holiday season. The firm also topped market expectations for third-quarter revenue.
“Shopify has been a great performer. Expensive as can be, but yet the market doesn’t seem to care based on valuation,” said Allan Small, senior investment advisor of the Allan Small Financial Group with iA Private Wealth.
The technology sector was up 6.4%, one of only two major sectors to notch gains in Toronto. The other was consumer staples, which added 0.9%.
“A strong dollar in the U.S., interest rates higher in the U.S., these are things that don’t usually bode well for the Canadian markets based on commodities and oil,” Small said.
The U.S. dollar climbed to a six-month high against a basket of major currencies, while the U.S. 10-year yield was up 12 basis points at about 4.43%. Canadian bond yields rose by a similar degree. North American bond markets were closed Monday for a holiday.
“The 10-year Treasury yield is kind of creating a headwind against the equity rally. There’s sort of these conflicting signals where investors are celebrating all of these growth initiatives [under Donald Trump] but the bond market is pushing back,” said Jack Ablin, chief investment officer at Cresset Capital.
“The problem is between tariffs, tax cuts and immigration restrictions, it really is pushing on creating inflation pressure that the bond market can’t ignore.”
The TSX materials sector fell 1.5% as gold and copper prices fell. Energy was also down, losing 1.1%. The price of oil settled 0.1% higher after two days of sharp declines.
U.S. indexes had rallied to record highs since the Nov. 5 U.S. election as investors bet on a boost to equities from President-elect Trump’s proposed tax cuts and the prospect of easier regulatory policies.
But investor enthusiasm dampened on Tuesday. European shares lost 2% as European Central Bank policymakers warned that increased tariffs from Trump would hamper global growth.
Some of the stocks expected to perform well under Trump gave back gains with shares in electric car maker Tesla closing down 6% on Tuesday after rising nearly 40% since Election Day.
The small-cap Russell 2000 index fell 1.8% after closing at a three-year high on Monday.
On investors’ radar is Wednesday’s U.S. consumer price inflation data, followed by producer prices inflation and retail sales data later this week, as these could provide clues about the U.S. Federal Reserve’s policy path going forward. The data presents a near-term risk to investments.
Minneapolis Federal Reserve Bank President Neel Kashkari said Tuesday afternoon that U.S. monetary policy is “modestly restrictive,” with short-term borrowing costs continuing to slow inflation and the economy, but not by a lot.
Richmond Fed President Thomas Barkin had said earlier in the day that the U.S. central bank is ready to respond if inflation pressures rise or the job market weakens.
The Dow Jones Industrial Average fell 382.15 points, or 0.86%, to 43,910.98, the S&P 500 lost 17.36 points, or 0.29%, to 5,983.99 and the Nasdaq Composite lost 17.36 points, or 0.09%, to 19,281.40.
The Dow’s biggest decliner was Amgen, which closed down more than 7% due to a late-session sell-off.
Brokerage Cantor Fitzgerald said Amgen’s experimental obesity drug MariTide showed a 4% loss in bone mineral density in data that was published in February.
Among the S&P 500′s 11 major industry sectors, materials led declines with a 1.6% loss followed by healthcare , which was dragged down by Amgen.
The communications services index was the biggest sector gainer, adding 0.5%.
Biotech firm Novavax dropped 6% after cutting its annual revenue forecast due to lower-than-expected sales of its COVID-19 vaccine.
Honeywell hit a record high and closed up 3.8% after activist investor Elliott Investment said it has built a stake worth more than $5 billion in the industrial conglomerate.
Declining issues outnumbered advancers by a 3.48-to-1 ratio on the NYSE where there were 328 new highs and 101 new lows.
On the Nasdaq, 1,328 stocks rose and 3,012 fell as declining issues outnumbered advancers by a 2.27-to-1 ratio. The S&P 500 posted 55 new 52-week highs and 16 new lows while the Nasdaq Composite recorded 193 new highs and 129 new lows.
On U.S. exchanges, 15.29 billion shares changed hands compared with the 13.17-billion average for the last 20 sessions.
Reuters, Globe staff
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