TSX up slightly and U.S. markets fall on new coronavirus concerns

TORONTO - Canada's main stock index inched slightly higher while U.S. markets retreated from record highs on new concerns about the economic impact from the coronavirus.

"I think it's just a little bit of a flair-up here in investor emotions around some new information around the coronavirus: some deaths being reported in Japan and South Korea, some speculation around the number of Chinese cases being significantly higher than reported and I think partially just the fact that the market has done so well here to start 2020," said Mike Archibald, vice-president and portfolio manager with AGF Investments Inc.

Some large technology companies including Microsoft and Apple have recently issued warnings amid a slowdown in China related to the virus.

"So at some point in time that's likely to cause a little bit of a hiccup in the marketplace and I think that's largely what we're seeing today," he said in an interview.

Archibald said stocks sold off mid-morning when news came out suggesting that the virus named COVID-19 appears to be expanding a bit more into mainland China, and then clawed some of the way back heading into close.

The S&P/TSX composite index closed up 18.70 points at 17,944.06, after hitting an intraday record high of 17,970.51.

In New York, the Dow Jones industrial average was down 128.05 points at 29,219.98. The S&P 500 index was down 12.92 points at 3,373.23, while the Nasdaq composite was down 66.21 points at 9,750.96.

Seven of the 11 largest sectors on the TSX were higher but there was a defensive flavour to the action with REITs and utilities continuing to do well while the materials sector climbed as gold prices set a new seven-year high.

The April gold contract was up US$8.70 at US$1,620.50 an ounce and the March copper contract was down 1.8 cents at US$2.59 a pound.

Gold was helped by the U.S. 10-year bond yield hitting its lowest level of the year at about 1.5 per cent.

"I think there's still lots of ammunition for the gold prices to move higher if the U.S. dollar consolidates some of the recent gains that we've seen," Archibald said.

The Canadian dollar traded for 75.45 cents US compared with an average of 75.58 cents US on Wednesday.

Energy was also higher as U.S. gasoline stockpiles fell last week beyond expectations and crude inventories rose by 414,000 barrels, compared with forecasts of 2.5 million barrels.

The main beneficiaries are pipelines and mid-stream companies, rather than exploration and production companies, said Archibald. Cenovus Energy Inc. led with its shares gaining 1.75 per cent.

The April crude contract was up 39 cents at US$53.88 per barrel and the April natural gas contract was down four cents at US$1.93 per mmBTU.

Telecommunications sustained the largest decrease on the day.

A $1.3-billion equity offering by Telus Corp. pushed its shares down 3.2 per cent to hurt the telecom sector overall.

Technology also fell with Shopify Inc. and CGI Inc. both down about one per cent.

The stock market performance remains strong despite Thursday's "fairly minor pullback" in U.S. markets with little to support prognostications about a potential 10 per cent correction, Archibald said.

"Maybe we're just going to get into a little period of consolidation where it's healthy for some gains to be taken off the table, you reset the momentum in the market a little bit and then we can continue to move higher."

This report by The Canadian Press was first published Feb. 20, 2020.

Companies in this story: (TSX:SHOP, TSX:GIB.A, TSX:T, TSX:CVE, TSX:GSPTSE, TSX:CADUSD=X)