TSX CONTINUES TUMBLE TO END LOSING WEEK.
• The Toronto stock market ended a losing week with a tumble of more than 150 points while oil prices retreated following another indication of weakness in the world’s second-biggest economy and a revised forecast from the International Energy Agency.
The S&P/TSX composite index dropped 174.07 points to 13,731.05 with losses spread across all sectors save health, partly because investors are unsure how badly lower oil prices will affect Canada’s economy.
The IEA cut its forecast for global oil demand growth by 230,000 barrels a day, to 900,000, citing lower expectations from oil-exporting countries. The January crude contract in New York moved down US$2.14 to a fresh, five-year low of US$57.81 a barrel. Prices dropped 18% this week and analysts are unable to say where the price bottom will be.
“The [oil] market is in free fall essentially because there is no clarity on when supply will be cut,” said Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.
The Canadian dollar fell US0.33¢ to US86.42¢.
U.S. indexes were also lower after data showed that growth in China’s factory output declined further in November. Although industrial production was up 7.2% compared with the same month last year, it was down from October’s 7.7% growth and September’s 8% rate.
China’s economic growth slowed last quarter to a five-year low of 7.3%, below the official full-year target of 7.5%.
The Dow Jones industrial average fell 315.51 points to 17,280.83, Nasdaq gave back 54.56 points to 4,653.60 and the S&P 500 index was down 33 points at 2,002.33.
The Toronto stock market fell heavily this week, down 742 points, or 5.1%, leaving the index well into correction territory, having fallen more than 12% from summertime highs.
The Toronto market’s main index is barely 100 points, or 0.8%, away from where it started the year. On Friday, the TSX energy sector dropped 1.1%.
The energy sector has been a huge weight on the TSX, plunging 30% year to date, reflecting a drop in oil prices of about 45% since mid-year amid lower demand and far higher supplies, a situation made all the worse by OPEC’s refusal to cut production.
The January crude contract in New York moved down US$2.14 to a fresh, five-year low of US$57.81 a barrel.
Talisman Energy Inc. was a big positive for the TSX energy sector Friday. Its shares soared 18.3% to $5.04 after the Financial
Times reported that Spanish oil group Repsol SA is in talks to acquire Talisman in a deal that could value the Calgary company’s equity at up to US$8 billion. It says the price being negotiated is in a range between $6 and $8 per share, which would represent a premium of up to 117% to Talisman’s share price Thursday.
Like other energy companies, Talisman’s shares have been hit hard by falling oil prices and are down sharply from their 52-week high of $13.
The gold sector faded 1.75% with February gold off US$3.10 to US$1,222 an
ounce.