Loonie dives as oil slide continues
North American markets were mixed while the loonie was sharply lower Tuesday in the face of a surging U.S. dollar and a slide in commodity prices.
The Canadian dollar plunged 1.43 U.S. cents to 81.75 cents.
The fall in the loonie came as the June contract for benchmark oil fell $2.17 to $57.26 a barrel.
Oil has recovered somewhat in recent weeks after plunging below $50 from highs of about $107 last summer, but has been unable to gain traction above $60 a barrel amid a continued glut in world supply.
Meanwhile, June gold gave back $20.90 to $1,206.70 an ounce.
July copper was down seven cents to close at $2.84 a pound.
On equity markets, the Toronto Stock Exchange edged up 12.90 points to 15,121.02.
New York markets were mixed with indexes moving in a narrow range amid optimism over the latest read on U.S. housing construction but disappointing earnings news from WalMart Stores Inc., the world’s largest retailer.
The Dow Jones industrial average moved further into record territory, rising a slight 13.51 points to 18,312.39 after a record high close of 18,298.88 on Monday.
The S&P 500, which also set a record high of 2,129.20 on Monday, gave back 1.37 points to 2,127.83, while the Nasdaq fell 8.41 points to 5,070.03.
Norman Raschkowan, senior partner at Sage Road Advisors, pointed out that, with strength in the U.S. dollar, it was natural to expect some weakness in commodities, which are priced in the American currency. A higher U.S. dollar tends to depress commodity prices since it makes them more expensive for holders of other currencies.
“Copper and iron ore are both weak and so you’ve seen the natural resource sectors struggling today,” Raschkowan said.
He also said that both oil and gold have experienced a bit of a rally in the past couple of weeks.
“So part of it is . . . perhaps just a reaction to the strength in the U.S. dollar and some of it is just people taking some profits after what’s been a very strong few weeks,” he said.
In economic news, the U.S. Commerce Department said Tuesday that American housing starts rose 20.2 per cent in April to an annual rate of 1.14 million homes, the most since November 2007.
In corporate earnings, Wal-Mart reported a 7-per-cent drop in firstquarter profit as growth in sales at its U.S. stores slowed 1.1 per cent, with both figures missing analyst expectations. It shares were down $3.49, or 4.37 per cent, at $76.43.
In Canada, online gaming firm Amaya Inc. confirmed it was partnering with GVC Holdings PLC in a bid to buy the global online gaming company that operates PartyPoker. Its shares were up 30 cents, or 0.93 per cent, at $32.62.