S&P/TSX down, Loonie Plunges to 4-Year Low

Meanwhile equities hit a 2½ year high in a relatively quiet trading session

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Canadian equities hit a two and a half year high on Tuesday before selling off later in the session.

The S&P/TSX Composite Index (^OSPTX) finished the day down 38.52 points, 0.28%, to 13,951. South of the border a nasty winter storm put a damper on trading volume. The broad based S&P 500 finished the trading session up 5.10 points, or 0.28%.

The biggest headline of the day was the continued sell-off in the Canadian Dollar. During overnight trading the Loonie hit a four year low against the U.S. Dollar, to US$1.10.

It’s been all bad news for the Canadian dollar in 2014 with the Loonie losing 3% of its value relative to the U.S. Dollar year-to-date. This comes after a series of disappointing Canadian trade and employment reports has raised fears that the Bank of Canada, or BoC, will be forced to hold-off on any interest rate hikes in the foreseeable future.

Foreign exchange traders will be parsing through tomorrow’s BoC rate announcement. Dovish commentary could signal that a rate hike is another couple of months down the road which could ramp up selling pressure against the Loonie.

And if all of this sounds like macroeconomic gibberish, you’re absolutely right! The dollar’s plunge is a fun topic for pundits. It’s certainly relevant for travelers and businesses. But it has almost nothing to do with finding wonderful businesses at reasonable prices.

A number of years ago billionaire investor Warren Buffett summed it up best, ‘If Fed Chairman Alan Greenspan were to whisper to me what his monetary policy would be over the next two years, it wouldn’t change one thing I do.’

I’m inclined to follow Buffett’s example. Five years ago the talk was of a U.S. dollar collapse. Today the Loonie is out of style. Over the long run these fluctuations tend to even out.

On the corporate front, however, there were plenty of items for investors to digest.

Agrium (TSX:AGU, NYSE:AGU) updated its fourth quarter earnings guidance after the close yesterday. Management expects profits to come in at the bottom end of its previous estimates – between US$0.80 to US$1.25 per diluted share.

The weaker than expected guidance was blamed on lower than expected selling prices for wholesale nutrients as well as lower than expected volumes for ammonium nitrates and domestic potash supplies. Sales were also negatively impacted by rail transit problems. Agrium shares finished the trading session down 1.27% to $103.04

Bombardier (TSX:BBD.B) shares also down sharply for the fourth straight trading session. On Tuesday the company announced that it plans to lay off 1,700 workers from its aerospace division – roughly 6% of this division’s workforce.

This comes after Bombardier delayed its C-series aircraft last week and week orders for other aircraft have put pressure on the company’s cash reserves. Shares of Bombardier were down 3.65% to $3.96.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Disclosure: Robert Baillieul has no positions in any of the stocks mentioned in this article.  The Motley Fool recommends Agrium.  

More on Investing

growing plant shoots on stacked coins
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy Now and Own for 25 Years

These top TSX dividend stocks look oversold and now offer attractive yields for TFSA and RRSP investors.

Read more »

money cash dividends
Investing

Passive-Income Power: How to Make $105/Week TAX FREE in a Bear Market

Investors may want to pursue a passive-income strategy in this bear market by snagging dividend stocks like Freehold Royalties Ltd.…

Read more »

Money growing in soil , Business success concept.
Energy Stocks

3 Growth Stocks up +30% in 2022

These three growth stocks are up over 30% in 2022 alone but have come down in the last few weeks…

Read more »

Oil pumps against sunset
Energy Stocks

2 Energy Stocks That Jumped Over 60% This Year

Consider investing in these two energy stocks amid the recent pullback after putting up stellar gains earlier this year.

Read more »

Profit dial turned up to maximum
Dividend Stocks

RRSP Investors: 2 Undervalued TSX Stocks to Buy Now for Total Returns

Top TSX dividend stocks are now on sale for RRSP investors seeking attractive total returns.

Read more »

TFSA and coins
Dividend Stocks

2 Beaten-Down Stocks to Buy for Your TFSA

Two beaten-down, but high-yield TSX stocks are profitable options for TFSA investors.

Read more »

Volatile market, stock volatility
Stocks for Beginners

3 Top TSX Stocks to Buy in Volatile Markets

Sitting on cash? Consider these three TSX stocks for the long term.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

Inflation Soars to 7.7%: 1 Dividend Stock to Buy Now

Enbridge (TSX:ENB)(NYSE:ENB) stock looks like a magnificent dividend stock to help Canadians deal with inflation at 7.7%.

Read more »