TORONTO (CP) — The Toronto Stock Exchange closed slightly lower Monday as energy stocks were pulled down by the continuing slump in the price of oil.
The S&P/TSX composite index closed down 26.35 points at 14,251.53 as mining stocks buoyed by higher gold prices weren’t enough to offset energy’s drag on the market.
The energy subsector declined by 1.78 per cent on the day, while the gold subsector was the biggest gainer, adding 3.68 per cent.
Luciano Orengo, portfolio manager at Manulife Asset Management, said there will be more headwinds for the Toronto market as the supply of oil shows no signs of dropping even as soft global growth tamps down demand.
“It’s a commodity economy as far as the market is concerned,” he said.
On commodity markets, the September crude contract ended the day down 63 cents at US$41.87 a barrel, while the December gold contract rose $5.70 to US$1,118.40 an ounce.
September copper shed 3.05 cents to US$2.32 a pound, and the September contract for natural gas fell 7.3 cents to US$2.728 per thousand cubic feet.
Orengo said he expects low oil prices to stick around until the end of 2016. The recently signed deal on Iran’s nuclear program loosened sanctions on that country’s oil shipments, which will help keep prices low, Orengo said.
The price of a barrel of oil has more than halved in year, falling from highs above $110 in July 2014.
Overseas, Japan reported its recovery stalled in the April-June quarter, with gross domestic product contracting at a 1.6 per cent annual pace as a result of weaker domestic demand and slowing exports, which fell 16.5 per cent from a year earlier.
In addition to being the world’s third-largest economy behind the United States and China, Japan is also the world’s third-largest consumer of oil.
Orengo said China’s growth could also fall below expectations as the country grapples with stock market volatility.
“The U.S. seems to be the only area of positivity when it comes to global GDP,” he said.
In New York, the Dow Jones industrial average closed up 67.78 points at 17,545.18, while the S&P 500 advanced 10.90 points to 2,102.44 and the Nasdaq ended the day up 43.46 points at 5,091.70.
Yet Orengo said the United States’ performance is unreliable if investors are looking for it to be an engine of global growth.
“It’s not a clear-cut story of this is good and getting better, it’s a lot of stop and go,” he said.
The loonie rose four tenths of a U.S. cent to close at 76.42 cents US.
Orengo said Canada’s dollar has fallen because of the country’s perceived dependence on oil and the relative strength of the U.S. economy.
“Unless oil rebounds it’s hard to make a compelling case for the Canadian dollar,” he said.
Peter Henderson, The Canadian Press
