Canada’s main stock index moved negative near the end of trading Tuesday as the price of gold sank to a 2019 low.
The S&P/TSX composite index closed down 13.26 points to 16,502.20, after hitting an intraday high of 16,553.39, just 14 points off the all-time high set last July.
The Toronto market had been up most of the day as investors appeared to be showing more confidence that forecasts of economic doom were overblown due to a stronger-than-expected Chinese economy and a U.S. economy that continues to perform, says Natalie Taylor, portfolio manager at CIBC.
“So we’re seeing investors cycling away from defensive stocks, which have really led the rally since December, into less defensive sectors and this is particularly evident if you look at interest-sensitive sectors,” she said in an interview.
Taylor said setting a new high appears to be just around the corner, but moving meaningfully through that level depends on whether an acceleration of corporate growth can be a catalyst.
“I think you need to see upwards earnings revisions because the valuations can only expand for so long without the help from fundamentals.”
The influential financials sector rose 0.56 per cent on better yields, with Toronto-Dominion Bank and the Bank of Nova Scotia leading.
Health care was up more than one per cent, recovering from a couple of down days, as Aurora Cannabis Inc. and Canopy Growth Corp. rose about 3.96 and 2.38 per cent respectively.
Real estate and materials were the biggest losers on the day.
Materials fell 1.4 per cent as gold prices dropped to the lowest level since Dec. 24. The June gold contract was down US$14.10 at US$1,277.20 an ounce and the May copper contract was up 0.45 of a cent at US$2.93 a pound.
In New York, the Dow Jones industrial average was up 67.89 points at 26,452.66. The S&P 500 index was up 1.48 points at 2,907.06, while the Nasdaq composite was up 24.21 points at 8,000.22.
U.S. markets rose as Johnson & Johnson beat analyst profit estimates and raised its revenue growth forecast for the year. Netflix Inc. said after markets closed that it beat earnings and revenue forecasts.
Although early in the reporting season, U.S. first-quarter results are better than analysts had feared, even as some lowered their forecasts.
Reports from large Canadian companies are starting later this week and next and should be positive, said Taylor.
The Canadian dollar traded at an average of 74.84 cents US compared with an average of 74.88 cents US on Monday.
The May crude contract was up 65 cents at US$64.05 per barrel and the May natural gas contract was down 1.8 of a cent at US$2.57 per mmBTU.