TSX, dollar gain as U.S. markets slip

The TSX gained ground and the loonie added more than half a cent as signs of a faltering American economy signalled better news for the Canadian dollar.

The Toronto Stock Exchange’s S&P/TSX composite index ended the day up 30.60 points at 13,875.33, while U.S. markets turned negative.

Patrick Blais, senior portfolio manager at Manulife Asset Management, said share prices in the TSX sectors that are most sensitive to cyclical economic forces, such as energy and materials, may be rebounding after being hammered over the past year. “We may be at a point where some of these companies have found a floor and actually may outperform the market just on the fact that they can’t go any lower,” he said.

In New York, the Dow Jones Average of 30 stocks closed down 157.14 points at 16,924.75, dragged lower by a more than 9-per-cent fall in the stock value of Walmart after the retailing giant downgraded its expectations for sales and profits.

Meanwhile, the broader S&P 500 index fell 9.45 points to 1,994.24 and the Nasdaq retreated 13.76 points to 4,782.85.

Earlier in the day, the U.S. Commerce Department released data showing that retail sales grew just 0.1 per cent in September, below analyst expectations.

Also Wednesday, the Federal Reserve said in its latest Beige Book report on the health of the American economy that nine of its 12 regional banks reported modest growth from mid-August to October, down from11 reporting growth in the previous period.

Patrick Horan, principal at Agilith Capital, said the disappointing numbers mean the market is pushing the prospect of a rate hike by the U.S. central bank further and further into the future.

“As a result, all currencies and commodities that are the other side of a U.S. dollar trade are lifting,” he said.

That’s a reversal from the past year, he said, when America looked like it was going to pull the world out of an economic malaise and a strong U.S. dollar helped push down the value of gold, oil and the loonie.

“Now, the U.S. is basically back in the same soup everyone else is,” he said.

On commodity markets, the December gold contract rose $14.40 (U.S.) to $1,179.80 an ounce, the November crude contract fell two cents to $46.64 a barrel and the November contract for natural gas rose two cents to $2.518 per thousand cubic feet.

Horan said the TSX has tracked closely to the price of oil over the medium term as outside investors have bet that Canada’s economic prospects are tied closely to the commodity’s price. “It’s basically one giant stock exchange for oil.”

The loonie added 0.58 of a cent to end the day at 77.39 cents as the greenback fell against a range of currencies including the euro.