TORONTO (CP) — The price of oil recovered on Monday from the buffeting it took last week, but it wasn’t enough to stave off losses for the Toronto stock market and the Canadian dollar on Monday.
The S&P/TSX composite index fell 94.46 points to end the day at 12,695.49, after dropping nearly 227 points on Friday.
In New York, markets were mixed. The Dow Jones average of 30 stocks rose 103.29 points to close at 17,368.50, the broader S&P 500 index rose 9.57 points to 2,021.94 and the Nasdaq added 18.76 points to 4,952.23.
Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, said investors are taking a wait-and-see approach in advance of the U.S. Federal Reserve meeting later this week, at which the American central bank is expected to raise interest rates for the first time since the 2008 financial crisis.
“There’s not a lot of investors that are wanting to place bets in one direction or another until we get confirmation of exactly what the Fed is going to do,” he said.
Fehr said the central bank is widely expected to raise its benchmark interest rate a quarter of a point from the near-zero levels it has maintained over the past seven years.
“Clearly the U.S. economy and to some extent the global economy is nowhere near crisis mode anymore and it’s time to start adjusting that,” he said.
The question for investors now is not if the Fed will raise rates in its announcement on Thursday, he said, but how aggressive it will be with further rises in 2016 and beyond.
“That’s the only real source of uncertainty so far,” he said.
The January crude contract ended the day up 69 cents to US$36.31 a barrel. Oil has plummeted from a high of nearly US$108 a barrel in June 2014 and has fallen even further over the past two weeks as a worldwide supply glut has shown no signs of easing.
Fehr said demand had been sluggish for year coming out of the financial crisis, but the focus has switched to the supply side of the oil market as the United States has invested in domestic drilling and OPEC has kept production high in the face of plunging prices.
“There’s a lot of supply, and while demand is looking a little bit better, it’s not going to pick up overnight,” he said.
The February gold contract fell $12.30 to settle at US$1,063.40 per troy ounce and the January contract for natural gas fell 9.6 cents to US$1.894 per 1,000 cubic feet.
The loonie ended the day up 0.02 of a cent to 72.79 cents US, after falling below 73 cents U.S. on Friday for the first time since mid-2004.
Peter Henderson, The Canadian Press
