Home Technology North American markets decline; tech, crypto stocks drop sharply

North American markets decline; tech, crypto stocks drop sharply

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North American markets decline;  tech, crypto stocks drop sharply

Canada’s main stock index fell on Friday, part of a broad-based decline that also affected U.S. markets and led to steep losses in tech and cryptocurrency stocks.

The S&P/TSX Composite Index closed down 153.99 points at 20,111.38.

In New York, the Dow Jones Industrial Average closed down 292.30 points at 33,706.74. The S&P 500 index fell 55.26 points to 4,228.48, while the Nasdaq composite closed down 260.12 points to 12,705.22.

Risk aversion sentiment has affected growth sectors the most. The S&P/TSX capped information technology index slid 3.29% during the day, and losses in the mining sector also sent the capped materials index down 1.56%.

Cryptocurrencies fell sharply as Bitcoin fell 8.5% to $21,434, according to CoinDesk. Toronto-based crypto miner Hut 8 Mining Corp. fell 14% on Friday.

The slump ended what had been a strong run for stocks over the past five weeks, although it’s still unclear if Friday’s selloff is a sign of more storm clouds. important to come.

“It’s always better in hindsight, but we’ve had a really, really solid move over the last month and a half in the equity markets. It seems like a reasonable place for some level of consolidation here over the past few months. coming weeks,” said Mike Archibald, Vice-President and Portfolio Manager at AGF Investments.

Markets have rallied in recent weeks on investor sentiment that central bankers’ toughest interest rate hikes may be over, Archibald said. It’s not clear that’s the case, however – minutes of the US Federal Reserve’s July meeting released this week said inflation is still too high and made it clear that the central bank would continue to raise interest rates.

Many analysts are still expecting the US Federal Reserve to announce a 50 or even 75 basis point hike in its next rate announcement in September. Archibald said all eyes will be on the Fed meeting in Jackson Hole, Wyoming next week to see if Chairman Jerome Powell makes any comments that could indicate which direction the central bank is leaning.

“We should get a bit more clarity on that over the coming week, and that should determine whether this (market pullback) is a slight setback, or if we’re going to experience something a little more serious.” , did he declare.

Concerns about inflation and the health of the global economy intensified on Friday as new economic data out of Germany showed producer prices in Europe’s biggest economy saw their strongest unprecedented increase in July.

This news made investors nervous and immediately pushed German bond yields higher. North American bond yields quickly followed suit.

“We’re seeing a very solid rise in bond yields here today – up nearly 10 basis points depending on what market you’re looking at,” Archibald said. (A basis point is equal to one hundredth of a percentage point.)

Markets are also closely watching the impact of inflation on consumer spending. Statistics Canada said Friday that retail sales in Canada rose 1.1% to $63.1 billion in June, boosted by higher sales at gas stations and motor vehicle and parts dealers.

However, the agency said its preliminary estimate for July suggests retail sales for that month fell 2.0%, although it warned the figure would be revised.

The Canadian dollar was trading at 76.98 cents US against 77.35 cents US on Thursday.

The October crude oil contract rose 33 cents to US$90.44 per barrel and the September natural gas contract rose 15 cents to US$9.34 per mmBTU.

The December gold contract was down US$8.30 at US$1,762.90 an ounce and the September copper contract was up three cents at US$3.66 per pound.

This report from The Canadian Press was first published on August 19, 2022.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

Amanda Stephenson, The Canadian Press

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