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S&P/TSX composite falls on drop in materials sector, loonie tops 81 cents US

TORONTO — A supportive environment bolstered U.S. stock markets and Canada's main stock index dipped on lower metals prices, while the loonie increased for a seventh-straight day to top 81 cents US. "Strong U.S.

TORONTO — A supportive environment bolstered U.S. stock markets and Canada's main stock index dipped on lower metals prices, while the loonie increased for a seventh-straight day to top 81 cents US.

"Strong U.S. day based on supportive Federal Reserve, rebound in the economic, strong earnings from market leaders and in Canada a mixed day, some strength in energy and financials, offset by weakness in materials," said Anish Chopra, managing director with Portfolio Management Corp.

The American economy is on fire as first-quarter GDP surged at an annualized rate of 6.4 per cent.

Initial jobless claims continued to trend lower, increasing by 553,000 while corporate earnings reports have been strong with Facebook and Apple posting blowout results.

"It just shows the strength of the rebound as part of the reopening," he said in an interview.

The U.S. central bank continues to be supportive by saying Wednesday it's going to keep interest rates near zero with no talk of tapering current bond purchases, unlike the Bank of Canada.

"Vaccination rates in the U.S. keep climbing and the coronavirus just seems to be creeping downward, so that's effectively the U.S. story," Chopra said.

The S&P/TSX composite index closed down 101.03 points to 19,255.92. 

In New York, the S&P 500 index and Nasdaq composite enjoyed record days. 

The S&P 500 rose 28.29 points to 4,211.47 after hitting an intraday record of 4,218.78, while the Nasdaq composite was up 31.52 points at 14,082.55 after posting an intraday high of 14,211.57. The Dow Jones industrial average was up 239.98 points at 34,060.36. 

Meanwhile, the Canadian dollar traded for 81.35 cents US, the highest level since February 2018 and compared with 80.93 cents US on Wednesday. 

The loonie has gained strength on the longer-term rebound of commodities with crude oil prices strongly reversing last year's negative prices and gold strengthening.

However, materials was the biggest laggard on Thursday as a dovish Fed raised appetite for risk assets at the expense of gold. 

The June gold contract was down US$5.60 at US$1,768.30 an ounce and the July copper contract was down 1.1 cents at nearly US$4.49 a pound. 

Shares of Endeavour Mining Corp. lost 3.9 per cent and Yamana Gold Inc. was down 3.7 per cent.

Technology lost 1.4 per cent as Shopify Inc. gave back some of its hefty Wednesday gains to drop 4.7 per cent.

Health care was 1.8 per cent lower as cannabis producers Organigram Holdings Inc. fell 5.4 per cent and Aphria Inc. was down four per cent.

Canada's autoparts manufacturers felt the heat from Ford Motor Co.'s announcement that a chip shortage may force it to cut production by 50 per cent. 

Magna International Inc. and Linamar Corp. were each down 3.4 per cent while Martinrea International Inc. was 2.8 per cent lower.

Industrials also fell even though shares of Transat AT increased six per cent after reaching a deal with Ottawa to borrow up to $700 million.

Partially offsetting these sectors was strength in energy and financials.

Energy climbed as crude oil prices hit a one-month high, sending Vermilion Energy Corp. up three per cent and MEG Energy Inc. 2.6 per cent higher.

The June crude oil contract was up US$1.15 at US$65.01 per barrel and the June natural gas contract was down 4.9 cents at US$2.91 per mmBTU. 

"Despite the fact that you're going to get a near-term slowdown in India, Brazil and Japan as those countries deal with increasing cases of the coronavirus, other places of the world are reopening," Chopra said.

"So you've got strength in U.S. demand coming as that country reopens and then if you look to Europe, they should be reopening soon, too, so it's really demand-driven what's happening in those energy markets."

This report by The Canadian Press was first published April 29, 2021. 


Ross Marowits, The Canadian Press

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