TSX slides for third session
The Toronto Stock Exchange closed lower for the third straight session on Tuesday as investors direct their attention back to the fundamentals of the Canadian market.
The S&P/TSX composite index lost 49.31 points to close at 14,376.24 after starting the day in the black.
Allan Small, senior investment adviser at Holliswealth, said the markets had been positive following the resolution of the latest outbreak in the Greek debt crisis as well as last week's rate cut from the Bank of Canada.
With those headline-grabbing developments out of the way, he said, investors are turning back to look at the realities of the market and aren't liking what they see.
“We had our rally, and now we're concentrating on other areas of the market,” he said. “And right now in Canada those other areas are struggling.”
In the U.S., the Dow Jones industrial average plunged 181.12 points to 17,919.29, while the Nasdaq fell 10.74 points to 5,208.12. The S&P 500 lost 9.07 points to close at 2,119.21.
The Canadian dollar was up 0.29 of a cent to 77.23 cents US.
Small said the increase was the result of day-to-day volatility rather than any sign that the sliding loonie had reached bottom.
“The direction of our dollar is definitely down,” he said. “I'd be surprised if we see a big run-up in the dollar now.”
The Canadian dollar could fall even further against the greenback, Small said, and will remain weak for the near future as Canada looks to grow.
“How long it will stay that way remains to be seen,” he said. “I think it's dependent on how long it takes our economy to bounce back from a negative first half.”
Economists and analysts have suggested that Canada is in a technical recession, defined as two consecutive quarters of negative growth, although final second-quarter numbers have not been released.
Small said the prospect of an interest-rate hike from the American central bank this fall is the biggest driver for the Canadian dollar's value.
“Our dollar is going to trade more on what the U.S. does than what we do here in our country,” he said.
On the commodities markets, the September contract for crude oil closed up 42 cents to US$50.86, while the August contract for natural gas climbed 5.9 cents to US$2.882.
The August contract for gold ended the day down US$3.50 to US$1,103.50 per ounce.
Small noted that gold has become much less important as a safe-haven commodity as global markets have equalized following the volatility of the 2008 downturn, when gold's value spiked.
This July 9 photo shows a Wall Street sign near the New York Stock Exchange in New York. U.S. stocks were mostly lower in early trading Tuesday following weak corporate earnings results from IBM, United Technologies and other big companies.