What to Watch for in the TSX Today

TSX investors may want to brace for volatility, as housing enters a bear market, and Royal Bank of Canada’s (TSX:RY)(NYSE:RY) profits dipped.

| More on:
TSX Today

The S&P/TSX Composite Index rose 36 points on Wednesday, August 24. Today, I want to discuss what investors should be on the lookout for on the Toronto Stock Exchange (TSX) right now. Let’s dive in.

Cannabis TSX stocks surged on Wednesday

The S&P/TSX Capped Health Care Index jumped 3.91% to close out Wednesday’s trading session. Interestingly, cannabis stocks were the key driver for growth on the day. What was behind this rally?

Canopy Growth (TSX:WEED)(NASDAQ:CGC) remains one of the premier cannabis stocks on the TSX. Its shares jumped 13% on August 24. However, the stock is still down 55% in the year-to-date period. Canopy Growth has plunged 77% compared to the same time in 2021. This stock will need to put together many more rallies to recoup the steep losses it has suffered this year.

In the first quarter (Q1) fiscal 2023, Canopy Growth reported flat revenue compared to the fourth quarter of the previous year. Meanwhile, it maintained its top position for combined premium flower and pre-rolled joints in Canada. The top cannabis company is still chasing profitability.

Tilray (TSX:TLRY)(NASDAQ:TLRY) is another top cannabis stock that rose 5.17% on Wednesday, August 24. Shares of Tilray are still down 46% in 2022. This top cannabis company reported a steep net loss of $457 million in the fourth quarter of fiscal 2022. That was down from net income of $33.6 million in the prior year.

There were no big moves to suggest that the upward move was anything more than a blip at the time of this writing. Indeed, investors may be hunting for discounts and potential buy-low targets in a turbulent market. Cannabis stocks have struggled for many months, which makes them an intriguing subject.

Canada’s housing officially enters a bear market

This week, Bank of Montreal chief economist Doug Porter declared that the Canada housing market had entered bear territory in the late summer. Aggressive rate tightening from the Bank of Canada (BoC) has put significant pressure on a sector that has thrived on historically low interest rates and a friendly credit climate. Home inventories have spiked over the past eight months, which has led to a far more balanced market.

Will the bloodbath continue for housing TSX stocks? EQB, a top alternative lender, has seen its stock drop 22% in 2022 as of close on August 24. A tight credit market and a sharp drop in sales will undoubtedly make the coming quarters a lot tougher for this company.

That all said, a recent Canadian Imperial Bank of Commerce report suggested that the BoC may be set to abandon rate hikes in September. The real estate space will still be faced with much higher rates than they have been used to over the past decade. Still, a halt to the rate hikes could provide some relief and pave the way for a potential move southward in the event of a recession.

Top Canadian banks suffer a slowdown: Which TSX stocks are suffering?

Scotiabank was the first of the Big Six Canadian banks to release its third-quarter 2022 earnings. Royal Bank (TSX:RY)(NYSE:RY), the top Canadian bank and the largest TSX stock by market cap, unveiled its Q3 2022 results on August 24. It delivered net income of $3.6 billion, which was down 17% from the previous year. Net income in its Personal and Commercial Banking segment fell 4%.

Royal Bank’s drop in year-over-year earnings may be a sign of struggles to come for Canada’s banking sector. Investors should be prepared for volatility, as a recession still looks likely.

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.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA and EQUITABLE GROUP INC.

More on Investing

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

3 Canadian Dividend Stocks to Buy Hand Over Fist

These three Canadian dividend stocks each offer a unique opportunity, making them some of the best investments to buy at…

Read more »

Chalk outline of two arrows pointing in opposite directions
Top TSX Stocks

2 TSX Stocks That Can Deliver Massive Gains in a Recession

Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock and another recession-resilient firm that can win big in 2023.

Read more »

Growing plant shoots on coins
Stocks for Beginners

For New (and Old) Investors: 3 Dividend-Paying ETFs With Lower-Risk Profiles

Three dividend-paying ETFs with lower-risk profiles are suitable for new and old investors alike.

Read more »

Hand holding smart phone with online shop concept on screen
Tech Stocks

Is Now the Time to Buy Shopify Stock?

Shopify stock (TSX:SHOP)(NYSE:SHOP) hasn't hit these lows in years. So is it a great time to buy the dip, or…

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

Retirement Wealth: 2 Oversold Canadian Stocks to Buy Now and Own for Decades

These industry-leading dividend stocks look cheap right now and have increased their distributions annually for decades.

Read more »

money cash dividends
Tech Stocks

Got $1,000? 3 Cheap Stocks to Buy Right Now

If you've got cash on the sidelines that you're looking to put to work, here are three cheap stocks that…

Read more »

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background
Dividend Stocks

2 of the Safest TSX Stocks Right Now

The stock market is heading towards a crash. Investors are seeking the safety of dividends, and these two stocks provide…

Read more »

question marks written reminders tickets
Tech Stocks

Nvidia Stock Is Down 60%: Should You Buy?

Nvidia (NASDAQ:NVDA) stock has slipped over 60% as short-term headwinds hurt its revenue. But a long-term view of the stock…

Read more »