TSX ends lower amid crude concerns
May began with a whimper for Canada’s biggest stock market, which ended trading Monday in negative territory as oil prices headed lower amid concerns over crude production levels.
The S&P/TSX composite index in Toronto slid 85.82 points to 13,865.63, with energy and mining stocks leading the way lower.
The June contract for North American benchmark crude faded $1.14 (U.S.) to $44.78 a barrel amid a report that crude production by the Organization of Petroleum Exporting Countries climbed in April.
“There’s just a lot of uncertainty in the commodities market and that is stemming not just from the supply side of oil,” said Craig Fehr, a Canadian market strategist at Edward Jones in St. Louis.
Fehr noted that the global economic environment continues to drive a lot of uncertainty over demand as growth itself continues to proceed in “fits and starts.”
Despite the dip in oil, the Canadian dollar still managed to strengthen, with the loonie gaining 0.08 of a cent to 79.77 cents.
It briefly hit 80 cents on Friday, but has not closed above that level since June 30.
Elsewhere in commodities, the June contract for natural gas plunged 14 cents to $2.04 per mmBtu, while June gold added $5.30 to $1,295.80 a troy ounce. July copper shed two cents to $2.27 a pound.
Some of the losses on the commodity heavy index were offset by the telecom sector, which advanced 3.9 per cent — the most on the TSX — after BCE Inc. announced it was buying Manitoba Telecom Services Inc. for $3.9 billion (Canadian).
Shares in Montreal-based BCE were down 0.34 per cent, or 20 cents, to $58.64, but stock in Manitoba Telecom surged 15 per cent, or $5.01, to $37.85.
New York markets, meanwhile, were solidly ahead, supported by an encouraging manufacturing report.
The Institute for Supply Management reported that manufacturing in the United States expanded in April for the second consecutive month, suggesting that American factories are adapting to a strong dollar and economic weakness overseas.
The Dow Jones industrial average jumped 117.52 points to 17,891.16, while the broader S&P 500 added 16.13 points to 2,081.43 and the Nasdaq rose 42.23 points to 4,817.59.
Fehr said investors should prepare for an unpredictable equities market throughout May, known for the adage, “Sell in May and go away.”
The saying encourages investors to cash out to avoid the historically underperforming six-month period between May to October.
“May could be not only volatile, but we could see some short-term weakness in equity markets,” he said. “So investors should use the big rebound we’ve seen in equity prices as an opportunity to rebalance.”