TORONTO — The Toronto stock market was sharply lower for a second consecutive day Thursday as investors appeared to ignore the positive news from overseas that cheered traders south of the border.
The S&P/TSX composite index closed down 133.58 points at 14,278.49, adding to a big decline of 212 points in the previous session as the International Monetary Fund cut its growth forecast for both the Canadian and global economies.
In New York, it was a different story amid renewed optimism that a deal was in the works between Greece and it creditors and signs that measures by Beijing to stem the rout on China’s stock markets appeared to be working.
The Dow Jones industrial average closed well off its highs for the day, but was still up 33.20 points at 17,548.62, after having plunged more than 261 points on Wednesday. The Nasdaq rose 12.64 points to 4,922.40 and the S&P 500 advanced 4.63 points to 2051.31.
On commodity markets, the August gold contract fell $4.30 to US$1.159 an ounce, but the August crude contract gained $1.13 to US$52.78 a barrel after losing ground all week.
The Canadian dollar also halted its recent skid, rising 0.21 of a U.S. cent to 78.70 cents.
In economic news, the IMF said economic growth in Canada this year would likely come in at 1.5 per cent, down from its April forecast of 2.2 per cent, while global growth now is expected to be 3.3 per cent, down from 3.5 per cent.
However, Craig Jerusalim, portfolio manager at CIBC Asset Management, noted that even the lower figure is “almost exactly at the 50-year average.”
“So things aren’t that dire and we can’t forget how stimulative low commodity prices and low oil prices are for countries like China and India. Clearly there will be some big winners and some big losers but … Canada is likely to dragged along by that beacon of strength that is the U.S.”
In China, markets rebounded after authorities in Beijing ordered state companies and executives to buy shares in their own companies, while securities regulators told investors who owned more than five per cent of a company’s stock they were not allowed to sell any of their holdings for six months.
Meanwhile, Greece delivered details of its economic reform package to creditor countries in Brussels just hours before a midnight deadline on Thursday that would set off a process leading up to the weekend intended to prevent a financial collapse of the nation.
For their part, creditor countries seem more willing to discuss how to ease the country’s debtload, a long-time sticking point in talks which are scheduled to continue into the weekend.
Jerusalim said he was optimistic leading up to the deadline.
“The risk and the implications for not getting a deal done are so severe that I think that alone ensures that something is worked out … even if that means kicking the can down the road for another six months and giving the parties time to work through some of their issues,” he said.
Brian McKenna, The Canadian Press
