Canada's main stock market was the underperformer on Thursday in a mixed trading session amid a variety of factors, including ongoing Brexit jitters and renewed U.S.-China trade angst. The S&P/TSX Composite Index was down 62 points or -0.4% to close at 16,087. The TSX gained just 13 points on Wednesday but remains 12.8% higher for the year-to-date. U.S. markets were mixed, but little changed, with the Dow Jones rising 7 points, the Nasdaq edging down 12 points and the S&P 500 nearly flat, off 2 points.
On the TSX, materials paced decliners with a 1.8% decrease as gold fell more than 1% to below $1,300 an ounce, a level the yellow metal just can't seem to hold. Financials shed 0.3% while energy was flat despite a modest rise in crude oil prices , which settled at US$58.61 per barrel. In a broad-based decline, energy and tech were the only sectors in the green.
In stock news , heavily traded Hexo (HEXO.TO) shares gained 4% after the company reported stronger quarterly revenues and announced the acquisition of cannabis firm Newstrike on Wednesday. Brookfield Asset Management (BAM-A.TO) was down 2% after purchasing a controlling stake in Oaktree Capital for $4.7 billion. Gold stocks were mostly weaker, including Goldcorp (G.TO, -2%), Barrick Gold (ABX.TO, -1.5%) and Kinross Gold (K.TO, -1.75%).
In economic news, new housing prices declined 0.1% in January, following four straight months of no change. The contraction was the first since the 0.2% m/m drop in February 2018. The index also fell 0.1% on a y/y basis in January following the flat reading (0.0%) in December. The annual decline in January is the first time the index has contracted since the 0.9% y/y drop in December 2009.
Canada's household credit market debt to income ratio rose to 174.0% in Q4 from 173.6% in Q3, leaving a fresh record high in Q4. National net worth tumbled 3.0% (q/q) after the 1.9% gain in Q3. Household net worth fell 2.8% in Q4, led lower by a 3.2% drop in financial asset values, which were in turn knocked lower by a 7.5% plunge in the value of equity and investment fund shares as the stock market nose-dived into year end.
While household debt levels remain elevated, the BoC has repeatedly expressed satisfaction with the increasing quality of that debt. Of course, officials have also pointed out that elevated debt levels make the economy more sensitive to rate hikes. Hence, this report adds to the already strong case for no change to the Bank's accommodative policy setting this year.
Traders will now look ahead to January manufacturing data on Friday.
The Canadian dollar lost 15 bps today to 75.03 US.