Commodities weigh heavy on TSX
The Toronto stock market closed lower Friday, dragged down by the energy and mining sectors, while the Canadian dollar crept marginally higher.
The S&P/TSX composite index fell 79.13 points to close at 14,186.24.
“Commodity stocks are just not the place to be right now,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier Inc. in Toronto.
The September contract for crude oil fell 31 cents (U.S.) to $48.14, while the August natural gas contract dropped four cents to $2.77 and the August gold contract fell $8.60 to $1,085.50.
The energy sector of the TSX lost more than 2 per cent, while the metals and mining sector declined 1.57 per cent.
Meanwhile, the loonie, which has been flirting with its lowest level since 2004, rose 0.03 of a cent to 76.72 cents.
“That’s probably as good a reflection as anything in terms of what foreigners think of our markets,” Nakamoto said.
In the U.S., markets closed lower amid disappointing quarterly earnings results and weak economic data. A housing report indicated that sales of new single-family homes dropped to their slowest pace in the past seven months.
The Dow Jones industrial average lost 163.39 points to settle at 17,568.53, while the Nasdaq dropped 57.78 points to 5,088.63. The S&P 500 gave back 22.50 points to close at 2,079.65.
However, Nakamoto noted that U.S. markets are still faring better than those north of the border.
“Canada doesn’t seem to be much in favour these days,” he said. “The U.S. is down today, but the U.S. is close to an all-time high. We’re nowhere near that.”
A slew of Canadian companies are set to report their second-quarter results next week, including oilpatch companies Suncor, Cenovus, Imperial Oil, Enbridge and TransCanada.
Oil companies are expected to report weak results due to the slump in the price of crude, which fell below the $50-a-barrel mark in recent days.
The outlook is not great for mining companies either, said Nakamoto, as prices of gold and other commodities have been weak.
Miners Agnico-Eagle Mines, Kinross Gold and Goldcorp Inc. will report their results next week.
“Anything that touches natural resources should be prepared for weakness in earnings,” Nakamoto said.
Earnings from Canada’s big banks, which don’t report until later in August, should be “OK, but nothing to write home about,” he added, noting that their wealth management and capital markets divisions should compensate somewhat for a slowdown in consumer borrowing and pressures on their net-interest margins stemming from recent rate cuts from the central bank.