TORONTO — Canada's main stock index recovered from morning weakness to edge higher Tuesday even though crude oil and gold prices continued to lose steam on concerns about lockdowns in China stemming from a rise in a new COVID-19 variant.
The S&P/TSX composite index closed up 7.06 points to 21,187.84 after dropping to a low of 20,971.11 in intraday trading.
In New York, the Dow Jones industrial average was up 599.10 points at 33,544.34. The S&P 500 index was up 89.34 points at 4,262.45, while the Nasdaq composite was up 367.40 points or 2.9 per cent at 12,948.62.
U.S. stock markets remain down between 7.7 and 17.2 per cent year-to-date but the Toronto-based market is off just 35 points because of its heavier concentration on commodities that have thrived of late, including as a result of the Russian invasion of Ukraine.
Energy was one of six sectors that lost ground on the TSX. It fell as crude prices dropped 6.4 per cent to their lowest level in March.
The April crude oil contract was down US$6.57 at US$96.44 per barrel and the April natural gas contract was down nine cents at US$4.57 per mmBTU.
Shares of Suncor Energy Inc. decreased 3.7 per cent while Baytex Energy Corp. was down 3.4 per cent.
Pressure on energy markets came as a result of China taking zero tolerance to escalating case counts of the so-called stealth Omicron in that country. The Chinese government has responded by locking down major regions, which has affected plants operated by iPhone supplier Foxconn as well as Toyota and Volkswagen.
"So the idea of a shutdown or potential 'lockdown' that could impact a combined population of some 45 million people for an unknown amount of time is a consideration when you're thinking about energy demand in the near-term," said Ryan Crowther, portfolio manager at Franklin Templeton Canada.
A further pullback in oil prices below US$100 per barrel could provide some relief to inflation, but inflationary pressures are felt across the entire commodity complex and only the news out of China could exacerbate supply chain issues, Crowther said.
"It's just the latest in many iterations of news that we've seen around supply chain problems, so having industrial facilities and factories and plants that are producing automobiles getting shut down is not going to help," he said in an interview.
The Canadian dollar traded for 78.11 cents US compared with 78.27 cents US on Monday.
Rising COVID cases also reduced sentiment around the Chinese stock market, which fell along with continued regulatory oversight being taken in the tech sector, Crowther added.
Consumer staples lost 1.9 per cent as shares of Saputo Inc. fell 4.2 per cent and Empire Company Ltd. was off 3.2 per cent.
Materials was down slightly on lower metals prices.
The April gold contract was down US$31.10 at US$1,929.70 an ounce and the May copper contract was down one cent at US$4.51 a pound.
Technology, following the trend in U.S. markets, was the TSX's big gainer on the day, increasing 2.2 per cent with Lightspeed Commerce Inc. up 8.5 per cent and Shopify Inc. 7.6 per cent higher.
"Tech stocks are regaining a little bit of ground, but would still have a long way to go in general if you look at their historical highs over the past year," Crowther said.
He said volatility will increase in the tech sector but there will be some days with rebounds.
"You can have a day like today where you get a rally across the board in Canadian tech, but it still leaves a long way to go if you're looking at 52-week highs of those names."
Air Canada shares climbed 3.7 per cent to push industrials higher despite a 32.7 per cent decrease in shares of Brookfield Business Partners LP following its split and creation of Brookfield Business Corp. The country's largest airline followed the trend of U.S. travel stocks that gained after U.S. carriers raised their revenue forecasts for the current quarter.
This report by The Canadian Press was first published March 15, 2022.
Companies in this story: (TSX:SU, TSX:BTE, TSX:SAP, TSX:EMP.A, TSX:AC, TSX:BBU.UN, TSX:SHOP, TSX:LSPD, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press