Geopolitical events in Ukraine cause North American stock markets to plummet | National affairs

TORONTO — North American stock markets collapsed in mid-afternoon amid geopolitical concerns after a report that the US authorized arms shipments from Baltic NATO members to Ukraine to fend off a Russian incursion.

Stock markets were on track to reverse Wednesday’s steep losses, with the Nasdaq composite recovering from a technical correction as everything changed around 2:15 p.m.

“That’s kind of taking the wind out of the market,” said Mike Archibald, vice president and portfolio manager at AGF Investments Inc.

Amid heightened market volatility, geopolitical headlines aren’t helping, “especially given the jitters” around the start of the year.

“It is clear that war will not be good for anyone. But I think it is mainly the uncertainty about what this may mean in the future,” he said in an interview.

“Will the US impose more sanctions on Russia? What is Russia’s response to those potential sanctions? There’s just a high level of obscurity around the specific situation at the moment, and so I think that’s basically what the broader market is currently doing.” scares.” moment.”

The composite S&P/TSX index closed 146.98 points lower to 21,058.18, after gaining a staggering 165 points in previous trading.

A similar trajectory took place in New York, where the Dow Jones industrial average fell 313.26 points to 34,715.39, after rising nearly 462 points.

The S&P 500 index lost 50.03 points to 4,482.73 for a 119-point swing, while the Nasdaq composite fell 186.24 points, or 1.3 percent, to 14,154.02 after rising a staggering 2.1 percent. .

Archibald said market sentiment started the day buoyant after overnight news that China cut prime rates in its first easing measure since April 2020. Bond yields also fell slightly from Wednesday’s highs.

“Both things gave some relief to the growth areas of the market,” he said.

The tech sector, in particular, initially gained strength to propel Nasdaq, while the Canadian tech sector was helped by early gains from Shopify Inc. and Lightspeed Commerce Inc.

In addition, weekly jobless claims in the US were at a three-month high due to the Omicron variant, which allayed concerns about the Federal Reserve’s aggressive stance at its meeting next week.

The afternoon sell-off resulted in just two of the 11 major sectors ending the day higher on the TSX.

Industrials was only marginally higher, as Richelieu Hardware Ltd.’s shares. were up 8.3 percent after the release of strong results, while utilities were up slightly.

A 10.4 percent increase by Well Health Technologies Corp. good results prevented the healthcare sector from finishing even lower.

Consumer durables trailed the most, with a loss of 2.4 percent, as shares of auto parts companies Magna International Inc. and Martinrea International Inc. decreased by 4.8 and 4.5 percent respectively.

Materials fell 1.9 percent on lower gold prices.

The February gold contract fell US$60 cents to US$1,842.60 an ounce and the March copper contract rose 11.25 cents to US$4.58 per pound.

The energy contract climbed to $87.10 a barrel but lost ground to pull the sector down when Birchcliff Energy Ltd. decreased by 3.9 percent.

The March crude oil contract fell 25 cents to $85.55 a barrel and the March natural gas contract fell 19.6 cents to $3.65 per mmBTU.

Crude oil prices were hurt last week by a build-up of US inventories and the commodity was deeply overbought, Archibald said.

“I just think some parts of the market are very overbought and will probably consolidate here.”

The Canadian dollar traded for 80.17 cents in the US against 80.05 cents in the US on Wednesday.

Archibald said the recent market weakness was a buying opportunity, especially for quality names like Morgan Stanley and Goldman Sachs that were oversold.

But he said Thursday was a generally negative day for the stock market, especially since there have been weak closes almost daily this year.

“There are people taking their money out of the market right now, given all the uncertainty, the rotation and clearly the geopolitical issues that seem to permeate.”

This report from The Canadian Press was first published on January 20, 2022.

Companies in this story: (TSX:BIR, TSX:RCH, TSH:WELL, TSX:MG, TSX:MRE, TSX:GSPTSE, TSX:CADUSD=X)

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