Bank falls drag Canada's main stock index lower on SVB contagion fears
13/03/2023 14:44
By Maiya Keidan
TORONTO, March 13 (Reuters) - Canada's main stock index
fell 0.7% on Monday as investors sold banking shares amid a
global sell off on fears of contagion risk from the collapse of
Silicon Valley Bank (SVB), but gains in gold miners helped
offset some of the declines.
The Toronto Stock Exchange's S&P/TSX composite index
.GSPTSE was down 165.02 points, or 0.8%, at 19609.90 in early
morning trading, after falling as low as 19,427.53, the lowest
since Jan. 5.
"Canadian banks are down a fair bit this morning, which
doesn't really make sense because bank issues in the U.S. have
zero to do with Canadian banks," Steve Palmer, chief investment
officer at AlphaNorth Asset Management.
"People should not have any reason to panic," he said adding
that Canadian bank stocks, and shares more generally in Canada,
will recover over the next 24 hours.
Within the first 10 minutes of trading on Monday morning,
the main index had fallen 1.7% to 19436.22.
U.S. authorities on Sunday launched emergency measures to
shore up confidence in the banking system after the failure of
SVB SIVB.O threatened to trigger a broader financial crisis.
Canadian banking regulator, the Office of the Superintendent
of Financial Institutions (OSFI), on Sunday said it was taking
temporary control of SVB's unit in the country.
The financials group .SPTTFS was down 2.5% in the early
morning trading session while many other Canadian stocks also
fell. Toronto Dominion Bank TD.TO shares fell 4% while Royal
Bank of Canada RY.TO shed 3%, while Bank of Nova Scotia
BNS.TO dropped 2.5% and CIBC was down 4%.
Shares in Canadian digital advertising-tech firm AcuityAds
Holdings Inc. AT.TO jumped 7.7% after it resumed trading on
Monday. The stock tumbled more than 15% on Friday before the
stock was halted after it said it maintained U.S. bank accounts
with SVB which amount to $55 million in deposits.
Energy stocks .SPTTEN were down 4.9% and industrials
.GSPTTIN down 1.1%.
The materials group, which includes precious and base metals
miners and fertilizer companies, .GSPTTMT , was the best
performing at the start up the day, up 1.8%.
The Canadian dollar rose against its U.S. counterpart on
Monday as the greenback fell on expectations the Federal Reserve
will be less aggressive in raising interest rates after
authorities stepped in to limit the fallout from the sudden
collapse of Silicon Valley Bank SIVB.O .
The loonie CAD= was trading 0.8% higher at C$1.3732 to the
greenback, or 72.81 U.S. cents.
(Additional reportin by Divya Rajagopal and Saqib Ahmed
Reporting by Maiya Keidan; Editing by Toby Chopra)
((Maiya.Keidan@thomsonreuters.com; 44 207 542 1594; Reuters
Messaging: maiya.keidan.thomsonreuters.com@reuters.net))