TSX shrugs off Greece default fears
The Toronto Stock Exchange enjoyed its third consecutive advance Wednesday, apparently indifferent to renewed fears of a debt default by Greece and the possibility of rising interest rates in the U.S. that sent markets elsewhere tumbling.
The S&P/TSX composite index was up 42.60 points at 14,947.51, after rising about 250 points over the previous two days. The loonie was down 0.43 of a U.S. cent at 80.65 cents.
On commodity markets, the August crude oil contract closed down 74 cents at $60.27 (U.S.) a barrel, while August gold lost $3.70 to $1,172.90 (U.S.) an ounce.
In New York, two days of advances came to an end as the Dow Jones industrial average plunged 178.00 points Wednesday to 17,966.07, while the Nasdaq dropped 37.68 points to 5,122.41 and the S&P 500 gave back 15.62 points to 2,108.58.
Norman Raschkowan, senior partner at Sage Road Advisors, noted that the TSX has been a bit of a “laggard” in recent weeks compared with U.S. markets, which have recently tested and even set record highs.
“So I think part of what’s happening is you’ve got a bit of a pullback in New York because some of the enthusiasm has waned and Canada, perhaps, has been benefiting from a bit of a catch-up.
“Then you’ve got news in a couple of particular securities, such as Rogers, which is a reasonably important security in the index, and so that has helped as well.”
Shares in Rogers Communications, which announced a $465-million deal to buy small wireless company Mobility, were up 76 cents, or1.78 per cent, at $43.35. In New York, the downward move came amid renewed hints from the U.S. Federal Reserve of not one but possibly two hikes this year to its historically low policy rate that has helped sustain markets since the Great Recession. Reserve governor Jerome Powell said Tuesday that he expected the U.S. central bank to begin raising its benchmark interest rate in September, with a second rate hike coming in December.
Expectations of a Fed increase got a further boost Wednesday when the U.S. Commerce Department re- leased a report showing the American economy contracted less than thought in the first quarter — 0.2 per cent versus 0.7 in its previous report.
As well, traders were put off by news from Europe indicating that Greece and its creditors remain farther apart on a deal than was believed earlier this week amid optimistic statements from both sides. Failure of the talks could lead to a debt default by Greece by the end of the month.
Still, Raschkowan believes that uncertainty is going to get resolved fairly soon, one way or another.
“I would expect that they will reach some sort of accommodation which allows Greece to postpone its sort of day of reckoning again,” Raschkowan said.