Canada’s main stock index closed lower on Friday, mirroring declines in U.S. markets as weakness in technology stocks dragged broader indexes down.
Brian Madden, chief investment officer at First Avenue Investment Counsel, said the pullback masked signs of underlying strength, pointing to gains in commodities and defensive sectors such as telecoms. He noted that despite the overall decline, there were more advancing stocks than decliners on the day.
Technology and financial shares weighed most heavily on the S&P/TSX composite index. Madden said software stocks have been under pressure in both Canada and the United States, while financial stocks paused after a strong rally earlier this year.
Canada’s Big Six banks reported solid earnings this week, beating expectations, but Madden said investors appeared to be taking profits after the sector’s recent run-up.
Investors also digested new economic data from Statistics Canada showing gross domestic product contracted at an annualized rate of 0.6 per cent in the fourth quarter. The figure missed forecasts from the Bank of Canada and most economists, who had expected flat growth.
StatCan said the contraction was largely driven by businesses drawing down inventories rather than producing new goods. Madden described the data as disappointing but said it was not as negative as the headline number suggested.
The S&P/TSX composite index fell 161.97 points to 34,339.99.
In New York, the Dow Jones industrial average dropped 521.28 points to 48,977.92. The S&P 500 fell 29.98 points to 6,878.88, while the Nasdaq composite lost 210.17 points to 22,668.21.
U.S. markets were pressured as investors continued to punish companies seen as vulnerable to disruption from artificial intelligence. Software stocks and other firms perceived as potential losers in the AI transition faced renewed selling.
Block added to market anxiety after CEO Jack Dorsey announced the company would cut nearly half of its workforce as part of an AI-driven restructuring.
Inflation data also weighed on sentiment after a report showed wholesale inflation in the United States rose 2.9 per cent last month, far above the 1.6 per cent economists had expected.
Oil prices surged amid escalating tensions between the United States and Iran over Tehran’s nuclear program. The April crude oil contract gained US$1.81 to settle at US$67.02 per barrel, reflecting fears that any conflict in the Middle East could disrupt global oil supplies.
The Canadian dollar traded at 73.30 cents US compared with 73.06 cents US on Thursday.
Gold prices also jumped as investors sought safe-haven assets, with the April gold contract rising US$53.70 to US$5,247.90 an ounce.
