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S&P/TSX composite rises to all-time high while U.S. markets lose ground

TORONTO — The technology and renewable energy sectors pushed Canada's main stock index to all-time records Tuesday as the loonie hovered around 83 cents US, its highest level in six years. The Canadian dollar traded for 82.

TORONTO — The technology and renewable energy sectors pushed Canada's main stock index to all-time records Tuesday as the loonie hovered around 83 cents US, its highest level in six years. 

The Canadian dollar traded for 82.98 cents US compared with 82.77 cents US on Monday. 

The gain in the loonie came as the S&P/TSX composite index added 32.40 points to reach a record close of 19,507.05. Earlier it set another milestone, hitting an intraday peak of 19,556.89.

In New York, the Dow Jones industrial average was down 267.13 points at 34,060.66. The S&P 500 index was down 35.46 points at 4,127.83, while the Nasdaq composite was off 75.41 points at 13,303.64. 

"It's really sort of a rather lacklustre day. Markets are really looking for direction," said Craig Jerusalim, portfolio manager at CIBC Asset Management. 

Technology and utilities were up more than one percentage point on the day with shares of BlackBerry Ltd. and Shopify Inc. each up 3.3 per cent

While not the largest components of the TSX, technology accounts for about 10 per cent of the market and utilities five per cent.

"So that's about 15 per cent of the TSX that's outperforming and offsetting some of the weakness in the value sectors like energy and materials," Jerusalim said in an interview.

The day started with both Walmart and Home Depot beating analyst expectations as U.S. consumers flocked to stores over the quarter, showing the power of pent-up demand.

But the good news was offset by macroeconomic data that showed U.S. housing starts fell 9.5 per cent last month to a seasonally adjusted annual rate of 1.569 million, well short of economist expectations.

Part of it has to do with high commodity prices and the impact of material and labour shortages, resulting in a cooling off of a very hot sector.

But housing starts are still relatively high, so it's not a major risk at this point, Jerusalim said

The energy sector took a hit on a BBC report that a new Iranian nuclear deal was to be announced on Wednesday. Crude oil prices dropped almost US$3 a barrel on concerns that about 1.7 million barrels a day of output could be added to the global supply.

Crude prices partially recovered as questions remain about how quickly an agreement could be finalized while at the same time crude demand is increasing with the upcoming driving season in the U.S.

"When you factor in the increasing demand and the time lag that it will take if everything goes to plan, that people sort of realized that it's not as severe as that initial gut reaction move was."

The July crude oil contract was down 78 cents at US$65.50 per barrel and the June natural gas contract was down 9.7 cents at US$3.01 per mmBTU. 

Vermilion Energy Inc. and Prairiesky Royalty Ltd. shares each lost 2.7 per cent.

Materials also moved lower even though metals prices rose.

The June gold contract was up 40 cents US at US$1,868.00 an ounce and the July copper contract was up 1.4 cents at nearly US$4.73 a pound. 

Copper rose on continued supply concerns resulting from political events in Chile, the world's largest copper producer.

Companies with direct exposure to Chile, such as Lundin Mining Corp., were lower despite the higher commodity price.

Gold prices rose on a weaker U.S. dollar and real bond yields going more negative.

This report by The Canadian Press was first published May 18, 2021. 


Ross Marowits, The Canadian Press