(New York and Toronto) The Toronto Stock Exchange started the week with a sharp slide, as governments around the world tighten restrictions on COVID-19 to adjust to higher numbers of attributable contamination cases to the new Omicron variant.
The New York Stock Exchange stalled, made nervous by bad news from the pandemic, a setback for Joe Biden in Congress and the Fed’s narrow room for maneuver.
“The uncertainty regarding the final impact of the Omicron variant remains,” Schwab analysts summarized in a note.
If the intensity of the virus seems relatively moderate, as expected, its speed of spread has nonetheless led the authorities in several countries to put in place health restrictions.
The Omicron variant “adds to the uncertainty over interest rates,” said Sam Stovall, chief investment officer at CFRA. Omicron’s spread poses the risk of an economic slowdown, but one that would arguably be accompanied by inflation, as it would exacerbate supply chain disruptions.
“The Fed [Banque centrale américaine] is a bit stuck ”, considers the analyst,“ because inflation will be a problem in both cases ”, if the economy picks up again or if it is disturbed for a long time by the new variant,“ and that could force it to rise again. the rates ”no matter what.
“It’s a pretty tough day, there’s no doubt about it,” said Michael Currie, vice president and investment advisor at TD Wealth Management. “Everyone is talking about Omicron. ”
Markets have moved forward and backward since the variant was discovered in November, as investors appear to weigh the potential severity of a fifth wave of COVID-19 and the impact it could have on economic activity, inflation and hardship existing supply chain.
On Monday, Quebec introduced a new round of capacity restrictions for bars, restaurants and gyms in the province, while in the United States, President Joe Biden will announce on Tuesday the new measures he is taking to combat the virus.
The Dutch government announced strict national lockdown on Sunday, while a British official said on Monday it could not guarantee that further restrictions would not be announced this week.
“We’re seeing a lot of restrictions or lockdowns put in place, which of course is bad for business,” said Currie. “So while Omicron itself isn’t as devastating as some might think, having all of these lockdowns and restrictions go into effect will have the same effect. ”
Markets were also pulled down by the potential fatal blow over the weekend to a US $ 2 trillion spending program proposed by the US government, when an influential senator said he could not support him. In addition, markets continue to absorb the Federal Reserve’s decision to end its aid to the economy more quickly due to rising inflation.
Sectors hardest hit by Monday’s stock drop were industrials, which fell 2.5% with stocks of airlines and travel-related companies, and health and tech. information – which fell 2.7% and 1.8%, respectively.
Cannabis in turmoil
Mr Currie argued that investors were moving away from high-valuation, high-growth companies for fear that inflation would hold them back. Two of the hardest hit stocks, for example, were cannabis companies Canopy Growth, which fell 8.7% on the day, and Tilray, which retreated 5.9%.
On the New York Commodities Exchange, the price of crude oil returned US $ 2.11 to US $ 68.61 per barrel, while natural gas rose nearly 11 cents US to US $ 3.64 the million BTUs.
The price of gold fell US $ 10.30 to US $ 1,794.60 per ounce and copper fell less than US $ 1 cent to US $ 4.29 per pound.
In the currency market, the Canadian dollar traded an average of 77.27 cents US, down from 77.85 cents US on Friday.
Among the values in the spotlight on Monday, the American software publisher and remote computing giant (cloud), Oracle, was sanctioned (-5.2% to $ 91.64) after the announcement of the he acquisition of Cerner (+ 0.8% to $ 90.49), a company specializing in IT services to the medical sector, for an enterprise value of $ 28.3 billion.
The biggest capitalisations of Wall Street, Apple (-0.8%) and Microsoft (-1.2%), continued to decline, handicapped by profit taking at the end of a good year.
Also in reverse, Tesla (-3.5%) and the new stars of electric transport, from Rivian (-7.9%) to Lucid (-5.1%), growth stocks shunned by investors who have them raised to higher valuations than those of automotive giants.
The movie theater chain AMC did well (+ 2% to $ 29.70) after the film was announced Spider-Man: No Way Home grossed $ 253 million at the North American box office this weekend, which ranks the film as the third-best released ever, pandemic or not.
Italian fashion house Ermenegildo Zegna made an encouraging start on Wall Street (+ 5.9% to $ 10.74), where it entered through a financial vehicle from European group Investindustrial, becoming the first Italian fashion label listed in New York.