Canada’s main stock index slumped just over 100 points on the last day of trading in 2022 amid mixed results across sectors, while US markets were down only slightly after reversing afternoon lows.
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The S&P/TSX Composite Index was down 100.97 points to close at 19,384.92.
The Dow Jones Industrial Average in New York was down 73.55 points at 33,147.25. The S&P 500 index was down 0.78 points at 3,839.50, while the Nasdaq Composite was down 11.61 points at 10,466.48.
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The S&P 500 closed 2022 with its worst performance since 2008, down 19.4 percent, though it did not see losses of the magnitude seen during the crisis, said Ian Chong, associate portfolio manager at First Avenue Investment Council Inc. .
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Other major indexes were also down on the year, with the Dow down 8.8 percent and the Nasdaq 33.1 percent, while the TSX’s losses were 8.72 percent, capping a strong year for energy stocks.
“On the whole it’s been a tough year,” Chong said.
“December is supposed to be a very good month, if you look at performance historically, and we didn’t get that.”
Chong said investors are expecting a broadly difficult first half of the new year.
“There has been a change from inflationary fears to recessionary fears,” he said.
Chong said he thinks a mild recession in the first half of the year is the most likely scenario.
The Canadian dollar traded for 73.83 US cents compared to 73.76 cents US on Thursday.
The TSX’s energy index was up half a percent, while the telecoms index was up 2.62 percent on news that a competition tribunal has rejected Rogers Communications Inc’s challenge to its acquisition of Shaw Communications Inc.
Chong said markets have been “over-focused” on economic data such as inflation, employment and GDP in 2022, looking for signs in rate-hike decisions from central banks. While that could happen as early as 2023, he said the next round of earnings will help focus investors.
“I think the shift will soon be to refocus on corporate earnings once they start to see those year-over-year declines. And then they start to really zone in on earnings margins and growth at the corporate level.” Will do it, and then figure out what would be a fair valuation,” he said.
“I think the early February (Federal Reserve) meeting is going to be very telling.”
Chong said oil prices edged up on Friday, likely on further optimism about demand as China begins to relax its COVID rules.
The February crude contract was up US$1.86 at US$80.26 a barrel and the February natural gas contract was down 8 cents at US$4.48 per mmBtu.
The February gold contract was up 20 cents at US$1,826.20 an ounce and the March copper contract was down one per cent at US$3.81 a pound.