Toronto stock mar­ket drops over oil prices


The Toronto stock mar­ket weak­ened Mon­day as a steep drop in oil prices and fall­out from the re­sound­ing “no” vote in the Greek debt ref­er­en­dum pulled most ma­jor sec­tors lower.

The S&P/TSX ended the ses­sion down 88.82 points to 14,593.57.

Oil prices closed at their low­est level in about three months with the Au­gust crude con­tract drop­ping $4.40 to US$52.53 a bar­rel.

Although Greek vot­ers re­jected a po­ten­tial bailout deal with the coun­try’s cred­i­tors, one of the big­gest drags on the TSX was a fur­ther de­cline in oil prices, said Kevin Head­land, di­rec­tor of the port­fo­lio ad­vi­sory group at Man­ulife As­set Man­age­ment.

“I don’t think we’re that tied to the Greece is­sue,” he said. “If there are fur­ther is­sues in Europe it could hurt some of our ex­ports, per­haps oil, but ul­ti­mately Europe has not tra­di­tion­ally been a large trad­ing part­ner with Canada.”

Head­land said oil prices could fall even more be­cause of tepid fore­casts for global eco­nomic growth as well as changes that could de­velop from ne­go­ti­a­tions over Iran’s nu­clear pro­gram.

If a nu­clear agree­ment is reached, Western sanc­tions would be lifted and that could open the flood­gates of sup­ply from the oil-rich na­tion. With­out sanc­tions on Iran the al­ready over­abun­dant sup­ply of oil from other coun­tries could drive in­ter­na­tional prices down fur­ther.

“There’s more down­side to global growth ex­pec­ta­tions than up­side, and global growth is di­rectly tied to de­mand for energy and oil,” he said.

In New York, the Dow Jones in­dus­trial av­er­age fell 46.53 points at 17,683.58, while the Nas­daq lost 17.27 points to 4,991.94 and the S&P 500 fell 8.02 points to 2,068.76.

The Cana­dian dol­lar ended down 0.58 of a U.S. cent to 79.04 cents US, its fifth con­sec­u­tive day of de­cline.

The loonie has been un­der re­newed pres­sure since spec­u­la­tion be­gan heat­ing up last week over a pos­si­ble in­ter­est rate cut from the Bank of Canada amid fears the coun­try is in a re­ces­sion - de­fined as two con­sec­u­tive quar­ters of neg­a­tive eco­nomic growth.

The Au­gust gold con­tract rose $9.70 to US$1,173.20 an ounce, with the TSX gold sec­tor was one of the big­gest gain­ers of the day, ris­ing 1.8 per cent.

Gold is con­sid­ered a rel­a­tive safe haven in times of eco­nomic tur­moil and fears over pos­si­ble fall­out from the Greek debt cri­sis have prompted in­vestors to move into less riskier as­sets.

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