Tsx Alert: S&P/TSX Composite Down as Oil Nears US$90 a Barrel
tsx plunged as the S&P/TSX composite fell more than 350 points on Friday in Canadian trading, driven by a sharp surge in oil that pushed prices toward US$90 a barrel. Global equity futures opened in the red and major overseas indexes slid in morning trading ET, amplifying inflation and growth worries. Investors also watched corporate results at Constellation Software Inc. and earnings on Wall Street from Hewlett Packard Enterprise Co. as markets reacted.
Tsx and North American markets slide as oil spikes
Markets moved decisively lower as oil prices jumped — with some contracts trading above US$90 per barrel and other benchmarks reaching higher levels — creating immediate inflation concerns. The S&P/TSX composite dropped sharply, while Wall Street futures were in the red after a steep finish to the previous session. In Europe, the STOXX 600 was down 1. 76% in morning trading ET; Britain’s FTSE 100 declined about 1%; Germany’s DAX slid 1. 69%; and France’s CAC 40 gave back 2. 19% in the same session.
Across Asia, Japan’s Nikkei closed 5. 2% lower and Hong Kong’s Hang Seng fell 1. 35%, widening the rout. Commodity moves were dramatic: Brent crude futures were up to US$105. 46 a barrel and West Texas Intermediate crude rose to US$103. 56 in one set of benchmarks, while other contracts traded near US$90. Spot gold lost 1. 5% to US$5, 092. 89 an ounce, and U. S. gold futures for April delivery were down 1. 1% at US$5, 101. Bond yields reflected the risk tone, with the U. S. 10-year note yield last up at 4. 170%. Currency trade was mixed; the Canadian dollar ranged between 73. 48 and 73. 93 US cents in early trading, while the U. S. dollar index climbed 0. 37% to 99. 35 in morning trade ET.
Immediate reactions
Helima Croft, head of global commodity strategy at RBC Capital Markets, said: “Faced with the worst oil supply shock since the 1970s, all eyes will be on Washington’s response. With no clear definition of what winning looks like, it is hard to forecast whether this will be a multi-week or multi-month conflict. “
Vasu Menon, managing director for investment strategy at OCBC in Singapore, said: “Unless oil flows through the Strait of Hormuz resume soon and regional tensions ease, upward pressure on prices is likely to persist. “
Dustin Reid, vice-president and chief strategist for fixed income at Mackenzie Investments, said: “The concern here that’s been creeping into the market throughout the week is that this conflict is going to be longer than originally discussed and oil prices, energy prices are going to remain higher for longer. ” Reid added that markets are shifting focus from higher inflation risk to the prospect of lower growth if energy costs stay elevated.
What’s next
Investors will watch for policy moves and further corporate earnings into next week, and any new developments in the Middle East that could push oil prices higher. Market participants will also track employment and other U. S. economic data already flagged as contributing to the risk sentiment, including a recent unexpected decline in U. S. payrolls, while tsx performance will hinge on whether oil-driven inflation pressures intensify or ease. Expect continued volatility in equity, commodity and currency markets in the near term as traders price the interaction between supply shocks and global growth prospects in morning and later trading sessions ET.
