Trade deficits take toll on markets

TORONTO • North American markets closed sharply lower Tuesday amid news of widening trade deficits both north and south of the border.

Toronto’s S&P/TSX composite index plunged 193.53 points to 15,173.94, despite higher commodity prices that saw oil break through the US$60-a-barrel mark.

The loonie was up 0.14 of a U.S. cent at 82.84 cents.

In New York, the Dow Jones industrials dropped 142.20 points to 17,928.20, the Nasdaq plummeted 77.60 points to 4,939.33 and the S&P 500 declined 25.03 points to 2,089.46.

All sectors on the TSX were down, including the gold sector, off a little under one per cent, even as gold rose US$6.40 to US$1,193.20 an ounce.

“The metal has rallied but the stocks are being left behind,” said Roland Chalupka, chief investment officer at Fiduciary Trust Canada, the wealth management arm of Franklin Templeton Investments Corp. “It’s a little bit unusual. Typically in the metals and mining area, you’ve got a pretty direct relationship between the underlying commodity and the actual stocks.”

Chalupka said gold stocks could be facing downward pressure despite rising commodity prices because investors are worried that the cost of financing will climb when the U.S. Federal Reserve raises interest rates.

Crude oil was up US$1.47 at US$60.40 a barrel.