TSX closes lower as loonie declines

The Toronto Stock Exchange closed lower Thursday, led by declines in the metals and mining and gold sectors, while the loonie continued its slide, hitting its lowest closing price in more than a decade for the second day in a row.

The S&P/TSX composite index fell 41.75 points to close at 14,265.37.

The metals and mining sector of the TSX was the biggest decliner, losing almost 5 per cent, followed by the global gold segment, which lost 3.8 per cent.

Energy and financials also slipped, while health-care, consumer staples and telecom sectors closed higher.

Meanwhile, the loonie inched 0.01 of a cent (U.S.) lower to 76.69 cents, replacing Wednesday’s close as its lowest closing price since Sept. 1, 2004.

In New York, markets closed lower following lacklustre earnings reports from 3M and Caterpillar.

The Dow Jones industrial average fell 119.12 points to 17,731.92, while the Nasdaq lost 25.36 points to close at 5,146.41 and the S&P 500 slipped 12 points, ending the day at 2,102.15.

“It’s really dominated by the quarterly earnings results that are going on right now,” said Mark Allen, vicepresident of Canadian equities at RBC Wealth Management.

The September contract for crude oil was down 74 cents at $48.45, as investors braced for lower demand stemming from weak global economic conditions and a glut of supply from Iran.

Iran recently reached a deal with global powers over its nuclear program, which will result in economic sanctions being lifted.

The country is planning to boost its production of oil, but Allen says it might take some time before that oil gets to market.

“There could be technical issues in terms of the reservoir,” Allen said.

“For three years they’ve been producing about a million barrels per day less than they were before the sanctions.

“When the fields are left for three years in a row, they might need to stimulate the reservoirs or repair or update the facilities that are in place in order to ramp up the production. It might take them a while to do that.”

Despite the negative impact of low crude prices on the oil-heavy TSX, it isn’t all bad news, Allen said.

“From my perspective, lower oil prices are actually really positive for delivering a recovery i n oil eventually, because it tends to mean there is less spending going on,” he said.

“The companies, when they’re evaluating their budgets and looking at a low oil price, will be more conservative in their approach to spending. Ultimately this is what will contribute to establishing a market balance.”

Meanwhile, the August natural gas contract was down 8.1 cents at $2.816 while the August gold contract rose $2.60 to at $1,094.10.