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MARKET REVIEW. Losses in the technology sector pushed the Toronto Stock Exchange down late Thursday morning, while the major US indices also retreated.
The New York Stock Exchange opened lower on Thursday, jostled by a higher than expected inflation indicator and poor macroeconomic figures which further complicate the reading of the economic situation in the United States.
To (re)consult market news
Stock market indices at noon
In Toronto, the S&P/TSX lost 44.30 points (-0.21%) to 20,676.09 points.
In New York, the S&P 500 yielded 25.04 points (-0.60%) to 4,122.56 points.
The Nasdaq fell by 74.11 points (-0.61%) to 11,996.48 points.
The DOW fell by 203.93 points (-0.60%) to 33,924.12 points.
The loon was down US$0.0033 (-0.4388%) at US$0.7437.
The oil rose US$0.35 (+0.45%) to US$78.94.
L’or rose US$6.80 (+0.37%) to US$1,852.10.
The bitcoin rose by US$2,180.53 (+9.57%) to US$24,967.27.
The context
The producer price index PPI emerged up 0.7% in January over one month, the highest level since June and significantly above economists’ projections (+0.4%).
“The ongoing disinflation thesis has just been seriously undermined,” commented Edward Moya of Oanda.
Bond yields reacted immediately and the yield on 10-year US government bonds climbed to a year-to-date high of 3.86%.
After the publication on Tuesday of the CPI consumer price index, also above forecasts, the jump in producer prices “will force the Fed (American central bank) to remain offensive”, warns Edward Moya , “and this is bad news for equity markets. That’s why we quit.”
The New York market was also worried about the fall in manufacturing activity in the Philadelphia region, which fell to -24.3 points in February against -8.9 points in January. A negative figure indicates a contraction in activity.
Another salient point is the slowdown in housing starts in the United States in January, whose pace was the weakest since June.
Since the beginning of the year, despite the proliferation of surprises on the macroeconomic front, “the equity market has always rebounded and put aside its anxieties,” recalled Patrick O’Hare of Briefing.com in a note.
During Thursday’s session, “his confidence will again be tested by the rise in rates, which will highlight the valuations that are too high,” warned the analyst.
“This market has not sufficiently integrated into its courses the magnitude of any future rate hikes,” added Edward Moya.
Lockheed Martin (LMT) (-2,02%) et Raytheon (RTX) (-1.47%) fell, after the decision of the Chinese authorities to place the two aeronautics and defense groups on the list of “unreliable entities”, which prohibits them from trading with China. The measure reflects the rise in tensions between the United States and China, following the interception of a Chinese balloon in American skies in early February.
The media group Paramount (PARA) unscrewed (-3.75%) after the publication of results below expectations. The accounts suffered from a decline in revenue on Paramount’s traditional channels, as well as a decline in licensed program sales.
IT infrastructure specialist Cisco (CSCO) was advancing (+5.78%) on the back of better-than-expected earnings and an upgrade to its outlook for its full-year staggered (August-July) 2023. He said demand remained strong and disruptions to the supply chain were being normalized.
The e-commerce platform Shopify (SHOP) plummeted (-16.76%), penalized for forecasts deemed disappointing for the current quarter, which take into account the deceleration of e-commerce in the wake of the pandemic and consumer spending due to macroeconomic uncertainty.
The toy maker Hasbro (HAS) (+3.41%) reported sales in line with forecasts and a slightly better than expected net profit. The group expects revenue to decline in 2023, but margins to improve and profits to be at least stable.
The specialist in plastic clogs Crocs (CROX) was prancing (+9.80%), supported by better-than-expected results for the fourth quarter, driven in particular by the leisure shoe brand Heydude, acquired in early 2022.