January 17, 2022

DS Duke

Global Business In World

Equities in Canada’s main centre found their way tenaciously above the breakeven point Friday, as health-care stocks overcame weakness in tech issues.

The S&P/TSX Composite ended a wild day by gaining 12.25 points to end the week Friday at 21,084.45. The loss on the week (albeit a shortened one) was 139 points, or 0.65%.

The Canadian dollar sprinted 0.54 cents to 79.10 cents U.S.

Health-care stocks, primarily pot stocks, did register gains, with Canopy Growth growing 35 cents, or 3.4%, to $10.77, while Cronos Group advanced 13 cents, or 2.7%, to $4.95.

Energy stocks jumped, with Birchcliff Energy progressing 14 cents, or 2.2% to $6.45, while Arc Resources grabbed 26 cents, or 2.2%, to $12.24.

Among financial stocks, Home Capital added $1.05, or 2.7%, to $40.17, while Canadian Western Bank moved ahead 84 cents, or 2.2%, to $38.92.

Tech stocks were pounded the worst, with Docebo tumbling $2.51, or 3.6%, to $66.96, while HUT 8 Mining skidded 30 cents, or 3.4%, to $8.41.

In consumer stocks, Canada Goose Holdings had a hard landing, losing $2.90, or 6.3%, to $43.50, while BRP Inc. fell $3.21, or 3%, to $104.57.

As well, Primo Water docked 28 cents, or 1.3%, $21.93, while Empire Company lost 48 cents, or 1.2%, to $38.45.

On the economic calendar, Statistics Canada said the economy created 55,000 jobs in December, not enough, though, to disturb the unemployment rate in this country from its current perch of 5.9%.

Moreover, Western University’s IVEY Purchasing Managers Index plummeted to 45 in December, down from 61.2 in November, and lower than the 46.7 figure seen in December 2020.

ON BAYSTREET

The TSX Venture Exchange inched up 0.25 points by the closing bell to 911.46, for a decline on the week of nearly 28 points, or 2.95%. .

Seven of the 12 TSX subgroups were negative on the day, with information technology failing 1.3%, consumer discretionary down 0.7%, and consumer staples faltering 0.6%.

Health-care led the gaining groups, picking up 1.2%, while energy gushed 0.8%, and financials were ahead of the game 0.5%.

ON WALLSTREET

The S&P 500 fell slightly on Friday at the end of a rough week for markets, which have come under pressure because of a spike in rates to begin 2022. Tech shares have led the losses.

The Dow Jones Industrials weakened 4.81 points to 36,231.66. The 30-stock index lost more than 106 points, or about 0.3%, as investors rotated into some value stocks amid the rise in rates.

The much-broader index fell 19.02 points to 4,677.03. The S&P 500 was off by 1.8%.

The NASDAQ docked 144.96 points, or 1%, at 14,935.90. The tech-heavy NASDAQ is on track for its worst week since February 2021, down more than 4% in the first five trading days of 2022.

Tech stocks lost ground further on Friday as yields jumped, continuing a theme of the week as investors rotate out of the sector. With rates rising rapidly, investors are dumping riskier stocks trading on high valuations based on estimates of profit growth far off in the future.

Microchip Technology was one of the biggest decliners in the NASDAQ, down about 3%. Other semiconductor stocks fell too, with Nvidia, Qualcomm and AMD down about 2%. Netflix fell about 2%, though other megacap tech names including Apple, Microsoft and Meta Platforms saw modest bounces.

Software stocks were among the hardest hit shares this week amid the rotation out of tech, with Salesforce, Adobe down about 9% for the week. Twilio fell 11%. Nearly all megacap tech stocks were set for a losing week, despite turning higher Friday. Netflix has lost 10% for the week, Microsoft has fallen 6% and Alphabet is down about 5%.

However, while tech stocks drove most of the market losses, value names showed strength, particularly among energy and financial stocks. Schlumberger and Hess both climbed about 16% for the week. Wells Fargo rose 13% this week and Regions Financial gained 14%.

Elsewhere, GameStop shares jumped more than 6% Friday following news that the company is venturing into the crypto world with investments in a marketplace for nonfungible tokens and digital currency partnerships to create games and other items.

On Friday the U.S. Labor Department reported the national economy added far fewer jobs in December than expected. The non-farm payrolls report showed an increase of 199,000 in December, though economists had expected growth of 422,000, according to Dow Jones.

While the headline number disappointed, there were some things in this jobs report that pointed to an improving economic picture and higher inflation. Average hourly earnings increased by 0.6%, above expectations. And the unemployment rate fell to 3.9%, the lowest level since Feb 2020 and well below the 4.1% expected.

Prices for 10-year Treasurys fell, raising yields to 1.77% from Thursday’s 1.73%. Treasury prices and yields move in opposite directions.

Oil prices settled 45 cents to $79.01 U.S. a barrel.

Gold prices marched ahead $5.50 to $1,794.70 U.S. an ounce.

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