Canada’s main stock index dropped on Wednesday, weighed down by losses in technology and mining sectors, as investors awaited the release of the minutes from the U.S. Federal Reserve’s latest policy meeting.
The Toronto Stock Exchange’s S&P/TSX composite index (.GSPTSE) closed 0.3% lower at 21,163.43, snapping a three-day winning streak.
Tech Sector Under Pressure
Technology stocks (.SPTTTK) led the decline, falling 1.8%, as crypto miners Hut 8 and Bitfarms (BITF.TO) plunged 3.9% and 7.0%, respectively, following a 2% drop in Bitcoin.
The tech sector was also dragged down by chip-maker Nvidia’s (NVDA.O) earnings report, which was expected to set the tone for the industry’s performance this year.
Nvidia beat analysts’ estimates for quarterly revenue and profit, but warned of supply constraints for its chips, which are used in gaming, data centers, and artificial intelligence.
“Nvidia earnings will be a big market mover after today, but it looks like investors are a little jittery heading into the number,” said Allan Small, senior investment adviser of Allan Small Financial Group with iA Private Wealth.
Mining Stocks Lose Shine
The materials sector (.GSPTTMT), which includes Canadian miners, extended its losses to a third consecutive session, falling 0.9%.
Gold miner Wheaton Precious Metals (WPM.TO) was the biggest loser among the materials stocks, tumbling 7.1% after brokerages cut their price targets on the stock due to its disappointing 2024 production forecast.
Gold prices also slipped on Wednesday, as the U.S. dollar firmed and Treasury yields rose ahead of the Fed minutes.
The Fed is expected to provide more details on the timing of its interest rate cuts, which could have a significant impact on the demand for the precious metal.
Financials Down, Gildan Up
The financial sector (.SPTTFS) also contributed to the index’s decline, dropping 0.6%.
Insurance company iA Financial Corp (IAG.TO) was the worst performer in the sector, plummeting 9.4% after it reported its fourth-quarter profit below analysts’ expectations.
On the positive side, apparel-maker Gildan Activewear (GIL.TO) rose 5.2% after it posted better-than-expected quarterly results, boosted by strong demand for its activewear products.
Outlook for 2025
Despite the pullback on Wednesday, Canada’s main stock index is set to hit a record high in 2025, according to a Reuters poll of analysts.
The poll found that the expected start of interest rate cuts by central banks, along with the recovery from the pandemic-induced recession, would support the Canadian economy and its stock market.
The TSX index is forecast to rise 9.4% to 23,175 by the end of 2025, from Monday’s close of 21,173.77, the poll showed. The index is also projected to gain 5.9% in 2024, after surging 21.6% in 2023, the best annual performance since 2009.
As Canada’s stock market looks ahead to a brighter future, some investors are also hoping for a more sustainable one.
Canada’s green bond issuance is poised for a rebound this year, after falling more than 50% in 2023, as market conditions improve and more issuers seek to finance environmentally friendly projects.
Green bonds are debt instruments that raise funds for projects that have positive environmental or social impacts, such as renewable energy, clean transportation, or social housing. Canada issued C$6.5 billion ($5.1 billion) worth of green bonds in 2023, down from C$13.6 billion in 2022, according to Refinitiv data. However, analysts expect the issuance to bounce back in 2024, as interest rates remain low, demand for green assets grows, and the federal government launches its first-ever green bond program.
Canada’s green bond market is also expected to benefit from the global efforts to combat climate change, as the country has pledged to reduce its greenhouse gas emissions by 40-45% by 2030, from 2005 levels.
By investing in green bonds, investors can not only earn returns, but also contribute to a more sustainable future for Canada and the world.
Source: ReutersÂ
