Dollarama and pot stocks cause another down day on the Toronto stock market

TORONTO — A hefty pullback in the shares of discount retailer Dollarama and some big names in the marijuana business pushed Canada's biggest stock market down in Thursday trading.

The S&P/TSX composite index closed down 47.31 points to 16,001.71, after hitting a low of 15,987.21 on 221.6 million shares traded.

article continues below

Dollarama was unquestionably the big story of the day, said Michael Currie, vice-president and investment adviser at TD Wealth.

Its shares were the worst TSX performer of the day, closing down 17 per cent to $43.12 after missing analyst forecasts in its second quarter.

"The numbers didn't look that terrible," he said in an interview.

"What really hit them is this is the second time they had a bit of a miss...Expectations were so high it didn't take much bad news to knock them down sharply."

Currie said Dollarama has been an investor favourite that has always justified its high trading valuation by coming out with good news quarter after quarter. It even increased its margin forecast on Thursday.

"I think you've got people acting a little bit spoiled by nothing but fantastic numbers and when you are at a high valuations again you're at a risk for a bigger drop for even a small miss," he added.

Its losses drove a nearly two per cent decrease for the consumer discretionary sector, the second worst performer on the day.

Another volatile day for Canada's largest cannabis companies also had an impact on the TSX and caused the health-care sector to drop by 8.7 per cent.

Base metals performed the best, followed by real estate, information technology, utilities, financials and industrials.

In New York, the Dow Jones industrial average was up 147.07 points to 26,145.99. The S&P 500 index was up 15.26 points to 2,904,18, while the Nasdaq composite was up 59.48 points at 8,013.71.

The American markets were helped by Apple Inc., whose 2.4-per-cent increase following the introduction of new smartphones helped the key technology sector.

The Canadian dollar was trading at an average of 76.94 cents US compared with an average of 76.84 cents US on Wednesday.

The U.S. greenback fell again Thursday as the consumer price index rose less than expected in August, suggesting that the pace of interest rate hikes could be slower than observers were anticipating, said Currie.

The October crude contract was down US$1.78 at US$68.59 per barrel, as it fell two per cent from Wednesday's four-month high.

"I think it's just a little bit of a pullback on what's been a really nice run for oil," he said.

The October natural gas contract was down 1.2 cents at US$2.82 per mmBTU.

The December gold contract was down $2.70 at US$1,208.20 an ounce and the December copper contract was up 0.7 of a cent at US$2.68 a pound.

Read Related Topics

© 2018 Burnaby Now

Popular Burnaby Now

Community Event Calendar


Find out what's happening in your community and submit your own local events.