North American markets close in the red on Tuesday

Canada’s main stock index fell slightly on Tuesday after the August long weekend, while US markets also closed in the red after a day of bumpy trading.

At the close of trading, Toronto’s main stock index, the S&P/TSX composite, was down 187.59 points at 19,505.33.

In New York, the Dow Jones Industrial Average closed down 402.23 points at 32,396.17. The S&P 500 index closed down 27.44 points at 4,091.19, while the Nasdaq Composite closed down 20.22 points at 12,348.76.

But for much of Tuesday, there was no obvious pattern to the North American market’s moves, said Michael Currie, vice president and chief investment officer at TD Wealth.

At one point in mid-afternoon, the S&P/TSX composition was down about half a percent, largely due to declines in the energy sector, while south of the border the Dow was down nearly twice that amount, the S&P 500 was almost flat and the Nasdaq was in positive territory.

Currie said that kind of divergence is often seen when investors aren’t quite sure what to make of events in the news. That appears to be what happened on Tuesday, when US House Speaker Nancy Pelosi arrived in Taiwan for a highly publicized visit. The visit has heightened US tensions with China and led some investors to worry there could be a spillover effect on financial markets in the form of possible blockades on international trade.

At this point, however, investors are speculating more than they are reacting to the tangible implications, Currie said.

“[Pelosi’s visit is] Certainly a great story, and it has market impacts, but it’s debatable whether it’s going to be a big event or not,” he added.

Investors also seem unsure what to infer from recent comments from US Federal Reserve officials suggesting continued interest rate hikes will be in the offing to further pressure against rising inflation, he said. Curry.

Earlier, recent weak data on the US economy had fueled speculation that the peak of inflation and aggressive interest rate hikes by the Federal Reserve may be approaching or has passed.

“So there’s a bit of a push and pull there,” Currie said.

In Canada, only the technology and healthcare sectors ended the day in positive territory, while the covered materials sector was the biggest loser, followed by energy.

The September crude contract was up 53 cents at $94.42 a barrel and the September natural gas contract was down 58 cents at $7.71. Currie said that when it comes to oil prices, all eyes will be on Wednesday’s meeting of the Organization of Petroleum Producing Countries and allies (OPEC+).

“There is talk that they will keep production stable,” Currie said. “Originally they wanted to increase it, but the prediction now is that it will stay flat because we are seeing quite a bit of weakness in oil over the last two months versus previous highs this year.”

The December gold contract was up $2 at $1,789.70 an ounce and the September copper contract was down two cents at $3.52 a pound.

While gold has risen quite strongly over the past two weeks, Tuesday’s surge is likely to be directly related to Pelosi’s visit, Currie said, noting that investors often seek refuge in gold in times of uncertainty. geopolitics.

Amid all the financial and political uncertainty right now, investors are looking to the latest generation of corporate earnings reports for a clue as to where the economy could be headed.

In Canada, Air Canada posted a nearly five-fold increase in revenue in its most recent quarter, but continued to suffer net losses of hundreds of millions due to a “very challenging” three months, CEO Mike Rousseau said.

Edmonton-based Capital Power Corp. reported a sharp rise in profit and upgraded its guidance for the year, while brewer Molson Coors Beverage Co. reported a drop in profit on lower net sales.

South of the border, ride-sharing company Uber jumped nearly 18 percent on Tuesday after reporting stronger revenue than analysts expected.

The Canadian dollar traded at 77.78 US cents compared to 77.98 US cents on Friday.

With files from The Associated Press

This report from The Canadian Press was first published on August 2, 2022.

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