Inflation Data, Dismal Shopify Guidance Dragging Down Canadian Market

(RTTNews) - The Canadian market is down in negative territory on Wednesday, weighed down by concerns about speedier interest rate hikes from the central bank after data showed an acceleration in inflation, and on highly disappointing earnings forecast from Shopify Inc.

Concerns about ongoing tensions between Russia and Ukraine too weigh on sentiment.

The benchmark S&P/TSX Composite Index is down 130.51 points or 0.6% at 21,372.04 a little past noon.

Technology stocks, particularly Shopify, are down with notable losses. The Capped Information Technology Index is down 4.4%.

Shopify Inc (SHOP.TO) is down nearly 19%. "We believe that the COVID-triggered acceleration of ecommerce that spilled into the first half of 2021 in the form of lockdowns and government stimulus will be absent from 2022, and there is caution around inflation and consumer spend near term," the company said in a statement.

It expects revenue growth for 2022 to be lower than the 57% rise recorded in 2021.

For the fourth quarter ended Dec. 31, revenue was $1.38 billion, compared with $977.7 million a year earlier. Analysts were expecting $1.33 billion, according to Refinitiv data.

Hut 8 Mining Corp (HUT.TO), Lightspeed Commerce (LSPD.TO), Nuvei Corp (NVEI.TO), Kinaxis Inc (KXS.TO), Converge Technology Solutions Corp (CTS.TO), Descartes Systems (DSG.TO) and BlackBerry (BB.TO) are down 2.5 to 4%.

Energy and materials shares are up with strong gains. In the energy section, MEG Energy (MEG.TO), Crescent Point Energy (CPG.TO), Enerplus Corp (ERF.TO), Suncor Energy (SU.TO), Vermilion Energy (VET.TO) and Canadian Natural Resources (CNQ.TO) are down 1.9 to 4%.

Among materials shares, Barrick Gold Corp (ABX.TO) is gaining more than 7%. Barrick Gold announced that its fourth-quarter net earnings more than doubled to $726 million or $0.41 per share from $347 million or $020 per share in the third quarter. Excluding items, adjusted net earnings for the quarter were $0.35 per share, compared to $0.24 per share in the previous quarter, the company said.

Oceanagold (OGC.TO), Iamgold Corp (IMG.TO), Kinross Gold Corp (K.TO) and Equinox Gold Corp (EQX.TO) are up 3% to 5%.

First Quantum Minerals (FM.TO) reported adjusted net earnings of $306 million for the fourth quarter of 2021, compared to $53 million in the year-ago quarter. In the third quarter of 2021, the company posted adjusted net earnings of $197 million. The stock is down more than 1%.

Data from Statistics Canada showed Canada's headline inflation rate accelerated to 5.1% in January of 2022, remaining the highest since September 1991 and significantly above market expectations of 4.8%.

On a monthly basis, consumer prices in Canada rose 0.9%.

Canada's annual core inflation rose to 4.3% in January of 2022, the highest since July of 1989, from 4% in the previous month.

Manufacturing sales in Canada were up 0.7% from a month earlier to C$ 64 billion in December of 2021, easing from an upwardly revised 3.1% rise in the previous month.

Wholesale sales in Canada rose by 0.6% month-over-month to C$76.2 billion in December of 2021, the fifth consecutive monthly increase.