TSX falls short as oil prices drop
Falling oil prices helped take another bite out of the Canadian stock market yesterday.
Things were up and down throughout the day, but the the S&P/TSX composite index ultimately closed down 38.15 points, or 0.3 per cent, to 14,690.46. The Venture composite index was up 2.47 points, or 0.1 per cent, to 2,642.57.
Crude oil on the New York Mercantile Exchange fell for a second-straight day. This time it was down $2.01 to $122.30 US a barrel, with its combined loss for the last two days amounting to more than $5 US a barrel.
The TSX energy index was down one per cent. EnCana Corp. was the most influential stock to the downside on Bay Street’s main index. It fell $1.15, or 1.3 per cent, to $89.25. Talisman Energy Inc. was down 36 cents, or 1.6 per cent, to $22.51.
Gold in New York was down $1.70 to $883.80 US an ounce yesterday. The TSX materials index, which tracks gold stocks among other things, was down one per cent. Barrick Gold Corp. was down 50 cents, or 1.3 per cent, to $39.66. Goldcorp Inc. fell 65 cents, or 1.6 per cent, to $39.18.
Robert Kavcic, economic analyst for BMO Capital Markets in Toronto, said another factor weighing on stocks were further comments from U.S. Federal Reserve chairman Ben Bernanke that emphasized his concern about inflation in the U.S.
Not only do such comments cast doubt that more economy-stimulating rate cuts from the Fed are coming, but also “a slow economy and perky inflation, that’s not a good combination for stocks,” Kavcic said.
Bernanke’s comments were seen as giving momentum to the U.S. dollar, which helped drive down relative prices commodities such as oil and gold, which trade in U.S.-currency values.
The rising U.S. dollar also helped drive down the relative value of the loonie which fell 95 basis points to 98.20 cents US. It was the fourthstraight decline for the Canadian dollar, which was more valuable than the U.S. dollar at the end of last week.
Two out of three of the main U.S. indexes declined yesterday. The Dow Jones industrial average fell 12.37 points, or 0.1 per cent, to 12,390.48. The S&P 500 was off by 0.45 points, or 0.03 per cent, to 1,377.20. The Nasdaq composite index, with a heavy weighting of technology stocks, was up 22.66 points, or 0.9 per cent. to 2,503.14.
“[U.S. technology stocks are] up 11.5 per cent in the last three months,” Kavcic said. “That’s actually the bestperforming sector in the U.S., even better than energy.”
The TSX information-technology sector was up 1.7 per cent, thanks largely to Research In Motion Ltd., which introduced a new BlackBerry model for use in Canada yesterday. RIM shares were up $1.84, or 1.4 per cent, to $136.44. Nortel Networks Corp. was up 25 cents, or 3.1 per cent, to $8.26.
The stock with the most positive influence the TSX composite was Bombardier Inc., which announced first-quarter profit almost tripled from the year-earlier amount, and it reinstated its quarterly dividend. Its stock was up 74 cents, or 9.1 per cent, to $8.90. This helped boost the industrials index 1.5 per cent, though Stantec Inc. was down 68 cents, or 2.3 per cent, to $28.80.