Dismal retail sales numbers cast shadow over S&P/TSX composite

TORONTO — Canada's main stock index suffered a small loss midweek as dismal retail sales numbers cast a shadow over what are typically quiet summer days for markets.

The S&P/TSX composite index closed down 36.26 points to 20,164.39 after briefly rising in earlier trading.

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The market had been marching towards a third-straight daily gain after Federal Reserve comments about interest rate hikes prompted a selloff.

Wednesday's performance came as Canadian retail sales in April posted their largest drop since the start of the pandemic as governments moved to deal with its third wave.

Statistics Canada said retail sales fell 5.7 per cent to $54.8 billion in April, the largest decline since April 2020 during the pandemic's first wave.

The agency also said its preliminary estimate suggested an additional drop of 3.2 per cent for May, but cautioned the figure would be revised.

The consumer sectors on the TSX decreased with shares of Empire Company Ltd. dropping 5.6 per cent after the grocery chain reported softer sales in its latest quarter.

Weakness in the retail sector is to be expected "given the dismal retail sales numbers we saw that were reported for April after the whole country went back into lockdowns," said Colin Cieszynski, chief market strategist at SIA Wealth Management.

"While the U.S. was reopening, Canada was closing down and that's impacting domestically focused companies," he said in an interview.

In New York, the Dow Jones industrial average was down 71.34 points at 33,874.24. The S&P 500 index was down 4.60 points at 4,241.84, while the Nasdaq composite was up 18.46 points at 14,271.73.

Slight stock market movements are typical for this time of year, Cieszynski said.

"There's not a lot of news out there for people to respond to, so the markets have just kind of gone quiet," he said.

"There's nothing really driving direction right now, so we're just seeing things just getting knocked around a little bit day to day, but nothing out of the ordinary."

The materials sector was one of eight sectors on the TSX that were lower. It fell despite higher gold and copper prices as Equinox Gold Corp. lost 6.3 per cent.

The August gold contract was up US$6.00 at US$1,783.40 an ounce and the July copper contract was up 10 cents at US$4.33 a pound.

Air Canada shares decreased 1.9 per cent to push industrials down.

Energy, technology and health care were higher.

Energy increased as crude oil prices rose above US$74 a barrel before settling about one dollar lower. The move pushed Whitecap Resources Inc. up 2.2 per cent higher while Crescent Point Energy Corp. was 1.6 per cent higher.

The August crude oil contract was up 23 cents at US$73.08 per barrel and the August natural gas contract was up 7.5 cents at US$3.35 per mmBTU.

Prices firmed up as U.S. crude inventories fell by 7.6 million barrels last week to 459.1 million barrels.

Cieszynski said it will be interesting to see what moves U.S. President Joe Biden takes if crude prices match the US$75- to US$77-per-barrel level in 2017 that prompted Donald Trump to open the strategic reserves to cap prices.

The Canadian dollar traded for 81.39 cents US compared with 80.93 cents US on Tuesday.

This report by The Canadian Press was first published June 23, 2021.


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