Canada’s main stock index fell 0.7% on Monday as investors sold bank stocks amid a global selloff on fears of contagion from the Silicon Valley Bank (SVB) collapse, but gold miners’ gains helped offset some of the declines.
The Toronto Stock Exchange’s S&P/TSX Composite Index fell 165.02 points, or 0.8%, to 19609.90 early this morning after falling as low as 19,427.53, its lowest level since Jan. 5.
“Canadian banks are down this morning, which doesn’t really make sense since the banking problems in the United States have nothing to do with Canadian banks,” said Steve Palmer, chief investment officer at AlphaNorth Asset Management.
“People shouldn’t have any reason to panic,” he said, adding that Canadian bank stocks and stocks in Canada in general are set to rally over the next 24 hours.
In the first 10 minutes of trading Monday morning, the main index was down 1.7% to 19436.22.
US authorities on Sunday took emergency measures to boost confidence in the banking system after SVB’s bankruptcy threatened to trigger a broader financial crisis.
Canada’s banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), said Sunday it was taking temporary control of the SVB entity in the country.
The financial group fell 2.5% early this morning, while many other Canadian stocks also fell. Toronto-Dominion Bank shares fell 4%, Royal Bank of Canada lost 3%, Bank of Nova Scotia 2.5% and CIBC 4%.
Shares in Canadian digital advertising technology company AcuityAds Holdings Inc. rose 7.7% after trading resumed on Monday. The stock fell more than 15% on Friday before halting trading after the company announced it has US bank accounts with the SVB that show $55 million in deposits.
Energy stocks fell 4.9% and industrials 1.1%.
The materials group, which includes precious and base metal miners and fertilizer companies, was the best performer at the start of the day, up 1.8%.
The Canadian dollar rose against its US counterpart on Monday as the greenback fell on expectations that the Federal Reserve would become less aggressive in raising interest rates after authorities stepped in to deal with the fallout from the sudden collapse of the Silicon Valley bank to limit. The loonie was trading 0.8% higher at 1.3732 Canadian dollars a greenback, or 72.81 US cents.
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