Canadian stock suffer worst week since pandemic crash

• S&P TSX Composite Index declined 0.4% on Friday, bringing its weekly decline to 6.6%.
• Investors fled riskier assets out of growing concern that soaring inflation could trigger a recession.
• Canada’s benchmark index has avoided steep losses of many other indexes.

During the worst week for the Canadian stock market in more than two years, investors fled riskier assets out of growing concern that soaring inflation could trigger a recession.

The S&P TSX Composite Index declined 0.4% on Friday, bringing its weekly decline to 6.6%, the largest drop since March 2020, when the pandemic devastated global markets.

Read More: As Inflation Continues to Rise & Recession Fears Loom, YouGov poll

While Canada’s benchmark index has avoided the steep losses of many other indexes, companies in the energy, utilities, and materials sectors have experienced the largest declines across all sectors as central banks have raised interest rates to combat inflation.

“What has hurt Canada is that finally we’re seeing the market start to price in a recession, even for the most cyclical, inflation sensitive stocks like energy,” Edgehill Partners Chief Investment Officer Jason Mann said in an interview. “Energy was the final place where people hid. It has been a bear market in which nothing is safe.”

This week, oil and gas stocks, which have helped boost the S&P/TSX this year, fell 14%. Canadian stock Natural Resources Ltd and Enbridge Inc. posted their worst weekly performance since March 2020, falling 17% and 9.5%, respectively. Both mining and utility companies experienced declines of more than 6 percent.

Read More: Oil prices falls below US$110 as U.S. Fed turns hawkish

This week, investors fled the equity markets, and on Monday, the S&P 500 Index entered its first bear market since March 2020. On Wednesday, the US Federal Reserve raised interest rates by 75 basis points, the largest increase since 1994, which exacerbated the decline.