Measly 34 stocks dodge TSX's slide into correction
Less than two months ago, the S&P/TSX Composite reached an all-time closing high of 22,087.22 points on March 29. Back then, resource heavyweights like Canadian Natural Resources Ltd., Enbridge Inc., and Nutrien Ltd. were driving year-to-date gains as they rode the wave of surging commodity prices and fears of supply disruptions stemming from Russia’s invasion of Ukraine.
But, like so many other equity markets, the wheels have come off Canada’s benchmark stock index since then. As of the close of trading Wednesday, the index was down 10.2 per cent from its record, meeting the threshold of what’s commonly defined as a correction.
It’s the clichéd wall of worry that has proven insurmountable as surging inflation and central banks’ efforts to contain that price pressure, Russia’s ongoing hostilities, and China’s attempt to curb COVID-19 all imperil the global economic outlook.
And so from the peak through Wednesday, a mere 34 members of the TSX Composite Index are above water.
It’s still an energy-heavy contingent of outperformers over that span, with Advantage Energy Ltd. (+25 per cent), Tourmaline Oil Corp. (+23.5 per cent) and Cenovus Energy Inc. (+20.3 per cent) leading the way.
BCE Inc. (which owns BNN Bloomberg through its Bell Media division) is the last of the stocks that’s above water since the peak; while its gain of 0.06 per cent is paltry, it’s in an envious position compared to the 205 other issuers that are in the red. That group ranges from CGI Inc. (-0.08 per cent) to Bausch Health Companies Inc., which is the lead laggard after shedding 58 per cent of its value — a big chunk of which evaporated Tuesday after some disappointing quarterly results and forecasts.
“Investors are focused on inflation and positioning for continued high [consumer price index] prints. That has lead them to sell all risk assets (bonds are not a hedge in a rising rate environment) in anticipation of higher short and long rates as central banks hike sooner and by more than previously anticipated,” said Dennis Mitchell, chief executive and chief investment officer of Starlight Capital, via email.