Canada’s stock market is on rate for its first loss that is monthly since the start of the coronavirus pandemic rocked global markets in March, signaling investors should brace for a wild ride ahead.
The problem today, as it was in the spring, is the spread of Covid-19. Virus cases are rising quickly in parts for the global globe that seemed to have the problem in order — including Canada. That’s a negative for the country’s growth outlook, and for a market that’s laden with commodities and bank shares, making it highly sensitive to the outlook that is global well.
Covid-19 cases have hit a record high in European countries with some imposing lockdown that is new. Closer to home, Prime Minister Justin Trudeau stated a virus that is second has begun in Canada’s four biggest provinces. A dollar that is resurgent seen silver give up some of its gains, forcing investors to question whether the safe haven asset is dealing with an even bigger slump as U.S. stimulus talks stall. And uncertainty across the next leader of the world’s economy that is largest is also incorporating to the wall of worry.
Anxiety splayed over the stock that is canadian this month is definitely an indication of exactly what the ultimate months of the year could look like for investors. It sets up for quite a volatile quarter,” Chris Kerlow, portfolio manager at Richardson GMP, said by phone “As we move into the fourth quarter. “A big part associated with term that is near has been the spike in virus cases.”
The S&P/TSX Composite Index has about 72% of its shares in the red down about 3% to date this month. About half of the trading sessions in were down days, according to data.
Prior to September, the benchmark had five consecutive months of gains — including a swift rally back to the bull zone — as governments around the globe flooded markets with trillions of dollars worth of financial and stimulus that is monetary.
Now, that rally stands on shaky ground.
Making up a whopping 65% of the market that is Canadian tech, financials and commodities-related shares are one of the biggest losers in September.
An recession that is economic a slump in gold prices and uncertainty around the U.S. elections may mean the TSX could struggle to shut into the green this year, Kerlow said. A economy that is pandemic-ridden hurt earnings growth and, in turn, hold back the rally seen in the last five months. Canada’s stock market is on rate for its first loss that is monthly.
“I think it will be a challenge for the TSX to access an all-time high,” he said.
A surge in the shares of consumer staples organizations, including grocery chains and supplement supplement providers, paints a photo of investor anxiety throughout the resurgence in Covid-19 cases. The S&P/TSX Consumer Staples Index is the gainer that is biggest therefore far this present year after reaching a fresh record earlier this week.
“The September pullback is more of the understanding that you can’t have the markets shrug off one of the greatest global disasters we’ve had in years,” Greg Taylor, primary investment officer at Purpose Investments Inc., said by phone. “We needed a little of a correction to take off some of this excess.”
For Taylor, the performance for the U.S. dollar will be the driver that is biggest of areas around the world. Risk assets and stocks that are cyclical which Canada has an abundance of, will soon be dependent regarding the greenback, he said.