Bank falls drag Canada's main stock index lower on SVB contagion fears (updated)
13/03/2023 20:40
(Updates to close)
By Maiya Keidan
TORONTO, March 13 (Reuters) - Canada's main stock index
fell 0.9% 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 provisionally closed down 186.02 points at 19588.90,
recovering from the day's low of 19,427.53, which was the lowest
since Jan. 5.
"The Canadian banks, most of them have some exposure into
the U.S.. Bank of Montreal (BMO), TD all have exposure in the
U.S. so there is some concern around those ones," said Mike
Archibald, a portfolio manager at AGF Investments.
Toronto Dominion Bank TD.TO shares fell as low as 4%
but recovered to end down 3.3% while Royal Bank of Canada
RY.TO fell 1.4%. Bank of Nova Scotia BNS.TO dropped 2.5% and
CIBC CM.TO fell 4% but respectively recovered to flat and down
1.4%. BMO BMO.TO ended down 2% after falling as much as 5.5%.
"I think financials in general are going to be a very
volatile space for the coming few weeks and months," he added.
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% by close on
Monday after recovering slightly from losing 2.5% in the early
morning trading session when many other Canadian stocks also
fell.
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% in early morning trading but down 4.5% and
0.5% respectively by 4 p.m ET (2000 GMT).
The materials group, which includes precious and base metals
miners and fertilizer companies, .GSPTTMT , was the best
performing for the day, up 2.1%.
Investors fled to gold on Monday, with the precious metal
XAU. up 2.4% to its highest since early February..
The Canadian dollar rose against its U.S. counterpart on
expectations the Federal Reserve will be less aggressive in
raising interest rates to curb inflation amid concerns over the
fallout from the SVB collapse.
The loonie CAD= was trading 0.7% lower at C$1.3738 to the
greenback, or 72.81 U.S. cents.
(Reporting by Maiya Keidan; Additional reporting by Divya
Rajagopal and Saqib Ahmed
Editing by Toby Chopra and Marguerita Choy)
((Maiya.Keidan@thomsonreuters.com; 44 207 542 1594; Reuters
Messaging: maiya.keidan.thomsonreuters.com@reuters.net))