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Canada’s main stock index fell on Friday to close out its worst week in more than two years, as the energy sector continued its recent losing streak and offset gains by technology and consumer discretionary stocks.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 73.58 points, or 0.4%, at 18,930.48, its lowest closing level since March 2021.

For the week, the TSX was down 6.6%, its biggest weekly decline since March 2020.

U.S. stocks were also volatile this week as investors grappled with a likely recession on the heels of rate hikes by multiple global central banks, including a three-quarter-percentage-point move by the Federal Reserve on Wednesday, seeking to tame rising inflation.

“All this chatter about recession has had investors really concerned,” said Elvis Picardo, portfolio manager at Luft Financial, iA Private Wealth.

“And on top of that we’ve seen a bit of a pullback in oil prices ... Energy equities were riding so high I think there has been a massive bout of profit taking in them.”

The energy group on the Toronto market fell 5.7%, its seventh straight day of declines, as oil prices tumbled to a four-week low. U.S. crude oil futures settled 6.8% lower as investors worried that a global economic slowdown could cut demand for energy.

The materials group, which includes precious and base metals miners and fertilizer companies, was also a drag, losing 0.9% as gold and copper prices fell.

In contrast, the technology sector added 2.2%, with Lightspeed Commerce leading gains with a surge of 7.1%.

Consumer discretionary rose 1.7%, while industrials ended 1% higher.

Separately, Canada’s antitrust regulator said the merger of Rogers Communications and Shaw Communications should not go ahead, arguing the deal poses threats to competition in Canada.

Shares of both companies ended higher.

U.S. stocks closed with a modest bounce on Friday but still suffered the biggest weekly percentage decline in two years as investors wrestled with the growing likelihood of a recession while global central banks tried to stamp out inflation.

Stubbornly high inflation has unnerved investors this year as the U.S. Federal Reserve and most major central banks have begun to pivot from easy monetary policies to tightening measures which will slow the economy, possibly causing a recession, and potentially dent corporate earnings.

Each of the three major Wall Street indexes fell the third week in a row. The benchmark S&P 500 index suffered its biggest weekly percentage drop since March 2020, the height of the COVID-19 pandemic plunge.

“Right now you are going to see a lot of volatility and it is primarily going to be because of the fact the Fed is going to be front-end loading all these rates hikes and just trying to gauge the inflation picture and it is very clouded right now,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors in Hunt Valley, Maryland.

“Just expect volatility, it is here to stay, it is going to be here until we get a little bit more clarity on have we really reached peak inflation.”

The Dow Jones Industrial Average fell 38.29 points, or 0.13%, to 29,888.78, the S&P 500 gained 8.07 points, or 0.22%, at 3,674.84 and the Nasdaq Composite added 152.25 points, or 1.43%, at 10,798.35.

For the week, the Dow lost 4.79%, its biggest weekly percentage drop since October, 2020, the S&P 500 lost 5.79% and the Nasdaq slid 4.78%.

The benchmark S&P index has slumped about 23% year-to-date and recently confirmed a bear market began on Jan. 3. The Dow Industrials was on the cusp of confirming its own bear market.

Stocks rallied on Wednesday after the Fed raised its key rate by 75 basis points, the biggest hike in nearly three decades, while the Bank of England and the Swiss National Bank also raised borrowing costs.

On Friday, Fed Chair Jerome Powell once again stressed the central bank’s focus on bringing back inflation to its 2% target while speaking at a conference.

Economic data on Friday showed production at U.S. factories fell unexpectedly in the latest indication economic activity was on the wane.

Gains were led by the communication services and consumer discretionary sectors, which rose 1.31% and up 1.22%, respectively, on the session. The two have been among the worst performing of the 11 major groups on the year.

In contrast, energy, the year’s best performing sector, fell with a 5.57% tumble and suffered its biggest weekly percentage drop since March 2020, on concerns a slowing global economy could sap demand for crude oil.

Also contributing to choppy trading was the expiration of monthly and quarterly options contracts ahead of the Juneteenth market holiday on Monday.

Reuters

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