TSX hit from oil sup­ply, loonie hits decade low

Loonie closes trad­ing Wed­nes­day at 76.70 cents US


The Toronto stock mar­ket suf­fered another ses­sion of declines on Wed­nes­day as oil set­tled be­low $50 for the first time in sev­eral months and the loonie tum­bled to its low­est level in more than a decade.

The S&P/TSX com­pos­ite in­dex lost 69.12 points to end at 14,307.12, dragged down by both the energy and re­source sec­tors.

Mean­while, the Cana­dian dol­lar lost 0.53 of a cent to close at 76.70 cents US, a level it hasn't reached since Sept. 1, 2004.

The loonie could fall even closer to 70 cents US in the com­ing months on the dis­mal com­bi­na­tion of weak re­cent Cana­dian eco­nomic data and a rate cut from the Bank of Canada last week, said Gareth Wat­son, vice-pres­i­dent of in­vest­ment man­age­ment and re­search at Richard­son GMP Ltd.

“Those are the two things will re­ally drive the cur­rency in the short term,” he said. “It's dif­fi­cult to find a pos­i­tive cat­a­lyst to get things back to 80 (cents) or above.”

Prices for crude oil are fac­ing a sim­i­lar bat­tle for pos­i­tive mo­ti­va­tion af­ter the latest fig­ures from the U.S. gov­ern­ment showed that a glut of oil sup­ply drove in­ven­to­ries un­ex­pect­edly higher last week.

The Septem­ber crude con­tract set­tled at its low­est level since April, clos­ing down $1.67 to US$49.19 a bar­rel, af­ter the data was re­leased. The TSX energy sec­tor fell 1.1 per cent.

Over­sup­ply could prove to be a re­cur­ring prob­lem in the com­ing months as some U.S. oil rigs wind down out­put in an ef­fort to cur­tail pro­duc­tion against de­mand.

Un­til a bal­ance is reached, the ex­pec­ta­tions of traders who see an ex­tended over­sup­ply in the mar­ket will likely con­tinue to prove cor­rect, Wat­son sug­gested.

“There's no ques­tion the short-term sup­ply bears are win­ning the ar­gu­ment at the mo­ment and prob­a­bly will con­tinue to win that ar­gu­ment for the rest of this year and into next year,” he said.

“It's re­ally dif­fi­cult to paint a pos­i­tive pic­ture on where oil prices are go­ing.”

In other key com­modi­ties, the Au­gust nat­u­ral gas con­tract rose 1.5 cents at US$2.897 while Au­gust gold lost US$12 at $1,091.50.

On Wall Street, stock mar­kets were dealt a com­bi­na­tion of dis­ap­point­ing re­sults from ma­jor tech­nol­ogy com­pa­nies which both dis­ap­pointed on their quar­terly re­sults or out­looks.

The Dow Jones in­dus­trial av­er­age dropped 68.25 points at 17,851.04, while the Nas­daq fell 36.35 points to 5,171.77. The S&P 500 dipped 5.06 points to 2,114.15.

Lead­ing the tech­nol­ogy pack was Ap­ple Inc. which em­pha­sized its cau­tious out­look for the cur­rent quar­ter late Tues­day as its latest re­sults showed slower iPhone sales fig­ures.

AP PHOTO A cur­rency trader speaks on the phone at the for­eign ex­change deal­ing room of the Korea Ex­change Bank head­quar­ters in Seoul, South Korea, Wed­nes­day. Asian stock mar­kets dropped Wed­nes­day af­ter U.S. earn­ings fell short of ex­pec­ta­tions and in­vestors be­gan to fo­cus on next week's Fed­eral Re­serve meet­ing.

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