Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Toronto market ends slightly down as Magna slides

Published 01/24/2023, 07:31 AM
Updated 01/24/2023, 05:09 PM
© Reuters. The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019.   REUTERS/Chris Helgren

By Fergal Smith

(Reuters) -Canada's main stock index edged slightly lower on Tuesday, pressured by a sharp drop in the shares of Magna International (NYSE:MGA) Inc and worries that higher borrowing costs would weigh on the corporate earnings outlook.

The Toronto Stock Exchange's S&P/TSX composite index ended down 2.03 points at 20,629.55, after posting on Monday its highest closing level in more than seven months.

The U.S. benchmark index S&P 500 also ended slightly lower.

"The issue for 2023 is going to be watching the lagged effects of the interest rate hikes that occurred last year," said Brian Madden, chief investment officer at First Avenue Investment Counsel in Toronto.

"The bigger issue for Canada and the U.S. is going to be not so much digesting the rate hikes but resetting expectations for corporate earnings because they are too high, given the macroeconomic environment."

Investors worry that aggressive interest rate hikes could trigger a recession, with data on Tuesday showing that U.S. business activity contracted for the seventh consecutive month in January.

The Bank of Canada will hike its key interest rate by a quarter of a percentage point to 4.5% on Wednesday and then hit pause on its tightening campaign, a Reuters poll of economists showed.

Shares of Magna slumped 7.2% after the automotive supplier cut its earnings margin outlook. That weighed on the consumer discretionary sector, which lost 0.7%.

Technology fell 1.1% and energy was down 1% as U.S. crude oil futures settled 1.8% lower at $80.13 a barrel, giving back some of its recent gains.

© Reuters. The Art Deco facade of the original Toronto Stock Exchange building is seen on Bay Street in Toronto, Ontario, Canada January 23, 2019.   REUTERS/Chris Helgren

A Canadian court dismissed the competition bureau's effort to block Rogers (NYSE:ROG) Communications Inc's C$20 billion ($14.9 billion) bid to buy Shaw Communications (NYSE:SJR) Inc, in a boost to the companies' efforts to close a deal struck nearly two years ago.

Rogers rose 2.9% and Shaw was up 2.8%.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.