OIL, COPPER HIT LOWS AS TSX ADDS TO LOSSES
TORONTO • The Toronto stock market extended its losses Thursday with resource stocks leading the way as oil and metal prices broke through important levels amid a strong U.S. currency and worries about a faltering global economy.
The S&P/TSX composite index was well off early lows, coming back from a tripledigit loss as gold stocks turned positive.
But the main index was still down 44.80 points to 14,760.64 following a 115-point tumble Wednesday as oil prices fell below US$90 a barrel for the first time since April 2013 and copper prices hit a six-month low.
The Canadian dollar was up US0.07¢ to US89.58¢.
U.S. indexes were largely lacklustre with the Dow Jones industrial average down 3.66 points to 16,801.05 following a 238point loss Wednesday. Nasdaq gained 8.11 points to 4,430.20 and the S&P 500 index added 0.01 of a point to 1,946.17.
The mining sector fell 1% with December copper down US4¢ to US$3 a pound. HudBay Minerals Inc. gave back 25¢ to $9.15.
The TSX energy sector lost 0.75%, while November crude in New York edged up US28¢ to US$91.01 a barrel after tumbling as low as US$88.18. Nymex crude is down about 9% this year. The TSX sector is down about 12% over the past month and was a major contributor to the Toronto market losing more than 4% during September.
“The TSX has sold off primarily because it got ahead of itself, especially on the energy side of things,” said Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.
Beyond economic worries, commodities also have suffered from a U.S. dollar that has strengthened sharply in recent weeks as a string of positive U.S. economic data persuaded some investors that the Federal Reserve will move to raise interest rates earlier than expected next year.
A higher U.S. dollar pressures commodities because a stronger greenback makes it more expensive for holders of other currencies to buy oil and metals that are dollar denominated.
Another source of uncertainty has come from the impending end of the third and last instalment of the Fed’s quantitative easing program, which saw the central bank buy up massive amounts of bonds. The move was intended to keep long-term rates low and has been partly responsible for the sharp run-up in markets since the lows of March 2009.
These pressures added up at a time when Toronto and New York markets were at — or near — record levels.
“We could assign a reason for it but the reality is the market is correcting because that’s what the market does,” said Mr. Pashootan. “We have had essentially 24 months of straight gains and valuations become frothy and, at some point, it corrects; it’s just the market being the market.”
The gold sector limited TSX losses as the group rose 1% with December bullion down US40¢ to US$1,214.20. Goldcorp Inc. was ahead 48¢ to $26.39.
Canadian Pacific Railway Ltd. was one of the few bright spots, ahead $11.89 to $234.70, a day after the company said it can double its profits and drive its revenue to $10-billion over the next four years.