TSX LITTLE CHANGED, OIL FUTURES DECLINE
TORONTO • The Toronto stock market closed little changed Monday as traders avoided energy stocks amid another forecast that suggested oil prices will stay low for an extended period.
The S&P/TSX composite index edged up 3.09 points to 14,312.50 while U.S. markets were shuttered for the Martin luther King Jr. holiday.
The Canadian dollar advanced US0.14¢ to US83.70¢ ahead of the Bank of Canada’s announcement on interest rates on Wednesday.
The TSX energy sector declined 1.6% and oil prices fell in electronic trading in new york after JPMorgan Chase & Co. became the latest financial institution to slash its oil price forecast for 2015.
The bank said Monday that Brent crude — a global benchmark for oil — will average out at US$49 a barrel, down from its previous forecast of US$82 a barrel. JPMorgan Chase expects to see a U-shaped recovery in oil prices, rising to US$90 a barrel in 2019.
“We’ve seen five years into this recovery it’s been a demand story. We’re now starting to see the supply side come into it, which has obviously pushed prices lower,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. louis.
“One of the continuing challenges for investors is to find or feel out this new equilibrium price for oil.”
late Monday afternoon, the February crude oil contract in new york dropped US$1.17 to US$47.52.
Oil has plunged 55% from the highs of June 2014 and is down 40% just since the end of november after OPEC refused to cut production levels to support prices.
Meanwhile, oilpatch companies continue to react to the collapse in oil prices.
CanElson Drilling Inc. shares gave back 17¢, or 4.3%, to $3.78 as the company said it will reduce its quarterly dividend by 50% to 3¢ and reduce its capital budget by 80% to $12.9 million.
The base metals sector led advancers, up 0.8% even as copper fell amid speculation about how the Chinese economy fared in the latest quarter. China is expected to report Tuesday that economic growth slowed to an annual 7.2% rate from 7.3% in the prior quarter.
Mr. Fehr said there is the potential for a lower number, but the result is the same.
“If it is seven, 7.1, 7.2, it’s kind of splitting hairs — the result is the Chinese economy continues to slow down its growth rate and that’s probably not a trend that is going to subside or reverse any time soon.”
The gain in the metals sector followed a 15% plunge last week after copper at one point fell below US$2.50 a pound and the World Bank revised downward its economic growth forecast. On Monday, the March copper contract in new york was down US4¢ in electronic trading to US$2.57 a pound.
The gold sector rose 0.5% while the February bullion contract added US30¢ to US$1,277.20 an ounce.
Goldcorp Inc. has offered to buy full control of Probe Mines ltd. and its Borden Gold project near Chapleau, Ont., in a friendly, all-stock takeover valued at $526 million. Goldcorp currently owns about 9.3% of Probe. Its shares were up 18¢ to $28.67 while Probe was up 50.6% at $5.06.