The week ended February 2, 2018, was negative not only for cannabis stocks but also for the broader market. The S&P 500 Index in the United States and the TSX (Toronto Stock Exchange 300 Composite) in Canada ended up with falls of 4% each compared to the beginning of the week.
On February 2, of the 500 stocks in the S&P 500 Index, 478 fell. Out of the 300 stocks in the TSX index, 232 fell on the same day.
Healthcare was among the TSX’s worst-performing sectors, falling as much as 5.2% on February 2. Cannabis stocks, which fall under the umbrella of the healthcare sector, saw their worst week yet, with most companies ending up deep in the red.
The ETFMG Alternative Harvest ETF (MJX) fell as much as 8% on February 2. The Horizons Marijuana Life Sciences ETF (HMMJ) fell 10%, and the Horizons Marijuana Life Sciences Index ETF (HMLSF) fell 11% on the day.
Broad market sell-off
The US market recently saw a better-than-expected jobs report, and wage growth reached new highs. These positive economic indicators increase the possibility of a rise in interest rates, which doesn’t bode well for equity investors. In such a situation, there’s usually a run toward safe havens such as fixed income assets.
The Canadian market, which is commodity-heavy, saw a similar trend in equities last week, as we can see in the chart above.