TSX CONCLUDES 2014 WITH 7% ADVANCE
TORONTO • The Toronto stock market closed little changed Wednesday, leaving the TSX with a respectable gain for the year, even as oil prices resumed their decline amid weak Chinese manufacturing data.
The S&P/TSX composite index finished the session 7.60 points lower at 14,632.44, meaning the TSX ended 2014 with a gain of 7%, down from a gain of almost 10% in 2013.
The Canadian dollar closed up US0.05¢ Wednesday at US86.20¢.
New York indexes piled up losses late in the session as the Dow Jones industrial average tumbled 160 points to 17,823.07, while the S&P 500 index dropped 21.45 points to 2,058.90 and Nasdaq gave back 41.39 points to 4,736.05.
The TSX advance for 2014 is about half of what it had racked up by mid-summer, supported by a huge run-up in the energy sector as crude prices came close to the US$110-a-barrel level.
Since then, oil prices have collapsed — they’re down more than 50% from June partly because of lower demand from weaker economies in China and Europe. But analysts say the major issue is one of supply, made worse by OPEC’s refusal last month to cut production in order to support prices.
The energy sector fell more than 20% last year as investors wondered how low oil prices can go.
Miners were also a major weight, with the base metals group down 14% in 2014.
Bright spots included financials, up 9% on the year.
But the best performers were those sectors benefiting from much lower gasoline prices and a Canadian dollar depressed by falling oil prices. These include the consumer discretionary sector, up 26%, and consumer staples, which rose 46%.
“I think these parts of the market may not do as well (in 2015) as they did in 2014 because they did extremely well,” said Macan Nia, director, portfolio advisory group at Manulife Asset Management.
“You need to temper expectations, but there are parts of the TSX that are not energy/materials related and they have very good business prospects, given a low Canadian dollar and also improving global economic environment and even a very strong U.S. environment.”
On Wednesday, the February crude contract in New York dropped US$0.85 to a fresh 5½ year low of US$53.27 a barrel, and the TSX energy sector moved down 0.06%.
Prices failed to respond to data showing a sharper than expected drawdown of U.S. crude oil inventories last week. The Energy Information Administration says inventories declined by 1.8 million barrels to 385.5 million barrels. Analysts had expected a decline of 1.25 million barrels for the week.
“The difficulty with this drop in the price is that historically, when oil has dropped, it has been on demand,” said Mr. Nia.
“And the fear is, among pundits, is: Does this drop highlight some underlying weakness in the global economy.”
The gold sector was down 0.2% as February bullion fell US$16.30 to US$1,183.90 an ounce.