Marred by Tech Rout, Canadian Stocks Post Worst Week in 3 Months

(Bloomberg) -- A sell-off of technology shares in the U.S. is reverberating in Canada, even though the sector makes up only a 10th of the nation’s stock market.

The small contribution of tech stocks to Canada’s market helped the S&P/TSX Composite Index outperform its U.S. counterpart Thursday: Canada was down 1.5%, while the S&P 500 Index plunged 3.5%. But as the rout continued for a second day, the TSX became collateral damage.

The equity market fell for a second session on Friday as traders honed in on lofty valuations of tech stocks, brushing past solid jobs data from both the U.S. and Canada. The Canadian benchmark ended the week 2.9% lower, its biggest slump since June 12, while the S&P 500 fell 2.3%.

A drop in the price of oil and gold also weighed on the nation’s stock market, with mining and energy stocks making up about 26% of the index.

With markets closed Monday for Labor Day, investors have a shortened week packed with central bank rate decisions and economic data releases. Commodities investors will be watching the European Central Bank’s rate decision due Sept. 10 as top central banks debate how best to execute monetary policy. Closer to home, the Bank of Canada will release its policy statement on Sept. 9 and Governor Tiff Macklem will give an economic progress report the next day.

©2020 Bloomberg L.P.