TSX falls before ending one of its best months in years
The S&P/TSX composite index closed down 447.37 points or nearly three per cent at 14,780.74.
“And I think today’s more just sober second thoughts, people are wondering if they got too euphoric yesterday.”
North American stock markets had one of their best performances in years last month.
The TSX gained 10.5 per cent after losing 17.7 per cent in March. That leaves it 17.8 per cent below its Feb. 20 record high.
While equity markets have bounced back there’s no real optimism in the bond market with 10-year U.S. treasuries not recovering much. That’s a big disconnect that has people wondering why the bond market isn’t responding, said Taylor.
“No one’s expecting the data to improve right now because this is kind of the eye of the storm. But it better start to improve in the next month or two to justify the bounce back in the equity markets.”
All 11 major sectors of the TSX were lower with materials, financials and health care leading the way.
Materials lost 3.7 per cent as metals dropped partly on weak economic data out of China. Wesdome Gold Mines Ltd. and Silvercorp Metals Inc. were each down about eight per cent.
The June gold contract was down US$19.20 at US$1,694.20 an ounce and the July copper contract was down 2.65 cents at US$2.34 a pound.
The heavyweight financials sector fell 3.5 per cent as Bank of Montreal and National Bank of Canada dipped 5.4 and 4.9 per cent respectively.
The June crude contract was up US$3.78 or 25 per cent at US$18.84 per barrel and the June natural gas contract was up eight cents at US$1.95 per mmBTU.
Crude is up nearly 63 per cent from last week’s lows but is still down nearly 70 per cent since January as economies have shut down to slow the spread of COVID-19 and Russia and Saudi Arabia engaged in a price war.
Despite the recent gains, Canadian oil producers are cutting output as no one’s making money at current prices.
The Canadian dollar traded for 71.89 cents US compared with an average of 71.83 cents US on Wednesday.
Taylor said the real risk for markets will be in the fall once the economy starts to normalize and optimism will be heightened for a healthy second-half recovery.
“If things start to open up and the economy doesn’t rebound as fast as everyone thinks, the earnings are really sluggish… I think that could be the big risk that causes a retest of those lows.”
© 2020 The Canadian Press