(Bloomberg) -- Canadian stocks tumbled at the open, then pared those losses, as traders caught up after the Toronto Stock Exchange and other venues were closed for a public holiday during Monday’s global selloff.
At the open in Toronto, the S&P/TSX Composite Index dropped as much as 2.6 per cent, extending losses for a third trading day. The index pared losses to 1.4 per cent as of 11:16 a.m. in Toronto. Four stocks were falling for every one that gained. The Canadian equities benchmark is on pace for its worst three-day stretch since October 2022.
Many of the country’s largest stocks including Shopify Inc., Royal Bank of Canada, Brookfield Corp. and Enbridge Inc. dropped, following steep losses for their U.S.-listed shares on Monday. The declines paralleled a sharp spike in volatility and a broader global selloff.
“When markets move, long weekends get cancelled,” Purpose Investments Chief Market Strategist Craig Basinger wrote in a Monday note to clients, saying the firm had been buying in its multi-asset portfolios on Monday while the TSX was closed.
He said Monday’s selloff “appears kind of mechanical,” creating a “mispricing of assets” and a buying opportunity.
Tuesday’s drop in Toronto was exacerbated by a move lower in gold prices, which extended Monday’s slide. The worst-performing stocks in the index on Tuesday were gold miners including SSR Mining Inc. and Lundin Gold Inc.
There may be a silver lining for TSX-listed stocks, though.
Monday’s selloff appeared to be part of a reversal out of tech stocks and into lower volatility alternatives, “and historically the TSX outperforms the U.S. markets during those periods,” Bloomberg Intelligence equity strategist Gillian Wolff said.
“The Achilles heel of the Canadian market — its lack of exposure to tech and AI — could give the market an edge near-term as investors navigate this reversal,” she said.
The S&P/TSX Composite had touched a record just last week, surpassing 23,000 points for the first time.
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