TORONTO — North American markets continued their recent advance Tuesday on the strength of positive news from abroad, but at a more measured pace than the previous two sessions.
The S&P/TSX composite index rose 66.18 points to 14,599.40 after a more than 250-point surge over the prior two trading days as markets cheered a deal between cash-strapped Greece and its creditors.
In New York, the Dow Jones industrial average was up 75.90 points at 18,053.58 after having soared more than 425 points over the same period. The Nasdaq jumped 33.38 points to 5,104.89, while the S&P 500 advanced 9.35 points to 2,108.95.
On commodity markets, the August crude contract recovered from early losses to rise 84 cents to US$53.04 a barrel despite a deal with Iran over its nuclear program. The deal could eventually result in oil from the big Middle East producer flooding onto an already saturated market.
Norman Raschkowan, senior partner at Sage Road Advisory, said the lack of a dampening effect on oil prices was likely due in part to the fact that it will take time for Iranian oil to affect markets.
“But I think perhaps the initial response was also that with that (the nuclear agreement) getting resolved and with China perhaps stabilizing, maybe the outlook for global growth is a little better than people were expecting last week,” he said.
Elsewhere in commodities, August natural gas fell more than two cents to US$2.84 per thousand cubic feet, while August gold gave back $1.90 to US$1,153.5 an ounce.
Besides the deal with Iran, traders were also continuing to keep an eye on the situation in Greece where the government of Prime Minister Alexis Tsipras introduced legislation in parliament containing austerity measures that are expected to face spirited opposition.
“I think people have assumed, and the markets if you look at their response, are certainly assuming, that he is going to be successful,” Raschkowan said.
“There is certainly no guarantee of that and the risk would be that he faces a revolt and is forced to call an election or something like that and the whole process gets bogged down again.”
In other economic news, the loonie was unchanged at 78.49 U.S. cents in advance of Wednesday’s interest rate announcement by the Bank of Canada. There has been widespread speculation the central bank will lower its trend-setting policy rate as a result of a continuing slowdown in the economy.
However, Raschkowan noted that many observers believe that a cut won’t necessarily encourage people to borrow more to boost the economy.
“I don’t see a lot of reason to cut rates, frankly,” he said, adding it would probably drive the loonie lower.
That would be a boon for manufacturers in Central Canada but do little for the West, which is suffering through low energy prices.
“It’s an interesting country to manage from a monetary policy standpoint that way,” he said.
Brian McKenna, The Canadian Press
