Canada’s main stock index fared better than American markets Monday even though all felt the brunt of brunt of technology sector weakness.
After generating a 30% return last year, the U.S. tech sector is up just 5.5% year-to-date with the S&P 500 having lost more than 13% from its early October peak.
Monday’s downturn in tech stocks wasn’t driven by any new news but an extension of existing undercurrents, says Craig Fehr, Canadian markets strategist for Edward Jones.
“Expectations have grown so high,” he said in an interview.
“And to the extent that the numbers have come in good but perhaps not living up to those lofty expectations, we’re seeing that entire sector kind of come under a bit of a re-rating from the market at the moment.”
Apple Inc.’s shares slid another 4% on a Wall Street Journal report that iPhone sales won’t be as strong as originally expected, while other FAANG names also lost ground with Facebook, Amazon, Netflix and Google all closing lower by 3.9 to 5.7%.
Facebook fell amid reports that CEO Mark Zuckerberg blamed chief operating officer Sheryl Sandberg for the handling of scandals facing the company.
In Canada, the tech sector was the worst performer on the day after health care, falling on an 11.3% drop by Shopify Inc, and lower values other tech names such as Blackberry Inc. and CGI Inc.
The S&P/TSX composite index closed down 84.49 points to 15,071.01, after hitting of low of 15,040.53.
The industrials sector led on a rebound of almost 24% in Bombardier shares, followed by telecommunications.
In New York, the Dow Jones industrial average lost 395.78 points to 25,017.44. The S&P 500 index was down 45.54 points at 2,690.73, while the Nasdaq composite was down 3%, shedding 219.40 points to 7,028.48.
“When you look to today, what we’re seeing is the defensive areas are actually holding up much better, which again suggests that there’s just a little bit of repositioning going on in the market here where investors are looking to take a little bit of risk off and they’re finding some more safety in the less cyclical areas of the market.”
Trade and tariffs remain concerns for investors heading into an upcoming meeting between U.S. President Donald Trump and Chinese president Xi Jinping at the G20 summit in Buenos Aires.
However, Fehr said the focus this week will be centred on the U.S. consumer with Black Friday approaching in a holiday-shortened week.
The Canadian dollar traded at an average of US75.89¢ compared with an average of US76.02¢ on Friday.
The January crude contract was up US52¢ at US$57.20 per barrel and the December natural gas contract was up US42.8¢ at US$4.70 per mmBTU.
Oil prices hit the highest level in a week on reports that OPEC and maybe Russia are thinking about another production cut or freeze, said Fehr.
“Supply is putting a pretty big cap on oil prices and I don’t think that’s likely to go away any time soon.”
The December gold contract was up US$2.30 at US$1,225.30 an ounce and the December copper contract was essentially flat at US$2.80 a pound.