The close: TSX ends lower, crude has best month on record

29 May 2020, 08:53

Canada’s main stock index ended a strong May a little weaker while crude oil prices enjoyed their best ever month, surging 88 per cent.

The S&P/TSX composite index closed down 69.90 points at 15,192.83. Sectors were mixed, with financials leading decliners with a 2% drop, as investors absorbed a week of earnings reports that featured massive loan loss provisions. Laurentian Bank lost 9.1% after cutting its dividend - the first such move by a major lender in almost three decades.

U.S. stocks finished mostly higher after President Donald Trump announced measures against China in response to new security legislation that were less threatening to the U.S. economy than investors had feared.

The Dow ended the session slightly lower, but all three indexes registered gains for the month and the week.

The S&P 500 initially extended losses after Trump said he was directing his administration to begin the process of eliminating special treatment for Hong Kong in response to China’s plans to impose new security legislation in the semi-autonomous territory.

But Trump made no mention of any action that could undermine the Phase One trade deal that Washington and Beijing struck early this year, a concern that had cast a cloud over the market throughout the week.

“He began speaking in a very tough tone,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina. “The market was worried he was going to announce something substantial, something detrimental to the U.S. economy. Then, as he spoke, it became clear the actions being taken were not going to be as dramatic as originally feared.”

Trump also said the United States is terminating its relationship with the World Health Organization, something he had threatened to do earlier this month.

S&P 500 technology shares gave the index its biggest boost, while financials were the biggest drag.

The latest confrontation between the U.S. and China has fueled concern that worsening tensions between the two world’s largest economies could derail the recent sharp gains in the stock market.

Expectations of a quick economic recovery from the coronavirus pandemic have driven the S&P 500 up more than 30% from its March lows.

The Dow Jones Industrial Average fell 17.53 points, or 0.07%, to 25,383.11, the S&P 500 gained 14.58 points, or 0.48%, to 3,044.31, and the Nasdaq Composite added 120.88 points, or 1.29%, to 9,489.87.

For the month, the Dow added 3.9%, the S&P 500 gained 4.5%, and the Nasdaq rose 6.8%. For the week, the Dow and S&P 500 each rose more than 3%, and the Nasdaq gained 1.8%.

New York Governor Andrew Cuomo said Friday that New York City is “on track” to enter phase one of reopening on June 8, and he said five upstate regions will now transition to phase two.

Federal Reserve Chair Jerome Powell, speaking in a webcast organized by Princeton University Friday, reiterated the U.S. central bank’s promise to use its tools to shore up the economy amid the coronavirus pandemic.

Twitter was down 2% and Facebook Inc shares slipped 0.2%, a day after Trump signed an order threatening social media firms with new regulations over free speech.

Upscale department store chain Nordstrom Inc slumped 11% after it reported a near 40% fall in quarterly sales due to pandemic-led store closures.

Salesforce.com Inc slipped 3.5% as the cloud-based business software maker cut its annual revenue and profit forecasts.

The July crude contract was up US$1.78 at US$35.49 per barrel and the July natural gas contract was up 2.2 cents at nearly US$1.85 per mmBTU. Futures closed out May with record monthly gains, on hopes that the U.S.-China trade deal would remain intact and on falling crude production.

The August gold contract was up US$23.40 at US$1,751.70 an ounce and the July copper contract was up 1.2 cents at nearly US$2.43 a pound.

Reuters, The Canadian Press, Globe staff

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.