TORONTO — Canada’s main stock index closed down 1.2% on Tuesday in a broad selloff caused by soaring bond yields that also pushed U.S. stock markets lower.

The S&P/TSX Composite Index closed down 262.88 points at 21,274.57 with losses led by the technology, industrials and healthcare sectors.

In New York, the Dow Jones Industrial Average closed down 543.34 points at 35,368.47. The S&P 500 index ended down 85.74 points at 4,577.11, while the Nasdaq composite was down 386.86 points at 14,506.90.

The selloff comes as higher bond yields dampen investors’ appetite for risky assets, said Candice Bangsund, portfolio manager at Fiera Capital.

“The sharp rise in bond yields has been driven by heightened speculation for a more aggressive path to policy normalization. Investors now expect four rate hikes from the Federal Reserve as early as March, and that obviously shakes both fixed income and bond markets here so far in 2022.”

Increased volatility and pressure in equity markets is widely expected after a very strong 2021, she said.

“Equity markets are trading at high valuations. And we had a feeling that volatility would resurface, especially given the ongoing transition from ultra-stimulative monetary policy to something less supportive.”

Although fairly widespread, the selloff was led by tech companies and declines this year have been steeper in the United States, Bangsund said.

“The Canadian market is holding up a little better and year-to-date it is doing much better than its US counterparts, given a heavy concentration in the energy sector which is doing extremely well.”

Oil rose amid strong demand, despite the Omicron variant, as well as tight supply.

“The outlook for global crude demand remains quite bright,” Bangsund said.

Crude oil rose again on Tuesday, closing at US$1.53 at US$84.83 a barrel and the February natural gas contract was up two cents at US$4.28 a mmBTU.

Still, Canadian energy producers saw their stock prices fall amid heavy trading, including Cenovus Energy Inc. down 1.8%, Crescent Point Energy Corp. down 2.3% and Suncor Energy Inc. down 0.94%.

On the technology side, Shopify Inc. lost 4.93%, Constellation Software Inc. lost 3.06%, and Lightspeed Commerce Inc. fell 8.06%.

The Canadian dollar was trading at 79.81 US cents from 79.87 US cents on Monday as a strong US dollar limits its growth, Bangsund said.

“You would think that given the resilience and phenomenal gains we’ve seen in crude prices, the Canadian dollar would trade at a higher valuation, but the Canadian dollar was ultimately capped by general underlying strength. of the US dollar.”

The February gold contract closed at US$4.10 at US$1,812.40 an ounce and the March copper contract was down 4 cents at $4.38 per pound.

This report from The Canadian Press was first published on January 18, 2022.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

The Canadian Press