The domestic equity market has nothing like the technology subsector depth offered by the S&P 500 and the Nasdaq Composite. Nonetheless, the tech stocks we do have constitute the biggest positive driver of the index so far in 2023.
The S&P/TSX Composite Index is up 1,029 points or 5.3 per cent year to date, as of Tuesday’s close. Shopify Inc. is by far the biggest contributor to returns, adding 354 to the benchmark. Energy giant Canadian Natural Resources is the second largest provider of upside, with 122 index points, and another tech stock, Constellation Software Inc., is close behind, adding 104 points.So these three big tech stocks represent 492 points of the equity index’s gain of 1,029 points.
Technology stocks do not dominate benchmark returns in Canada to the same extent that The Magnificent Seven - Apple,, Microsoft, Meta Platforms, Nvidia, Alphabet and Tesla – drive performance for U.S. index returns. At the same time, it’s clear that without the relatively small number of technology stocks, index returns in the Canadian market would be far less positive.
We are not accustomed to thinking of the technology sector as a central driver of benchmark performance – banks and resources would most often be cited first in terms of influence. Increasingly, investors will have to follow technology stocks more closely to understand market moves.