TSX closes lower after week of volatility despite surge in oil prices | iNFOnews | Thompson-Okanagan's News Source
Subscribe

Would you like to subscribe to our newsletter?

Current Conditions Cloudy  2.8°C

TSX closes lower after week of volatility despite surge in oil prices

Original Publication Date August 31, 2015 - 6:25 AM

TORONTO - The Toronto Stock Exchange ended the day down slightly despite a boost in oil prices

The S&P/TSX composite index closed down 5.95 points at 13,859.12, with the utilities subsector the biggest loser on the day.

Norman Raschkowan, senior partner at Sage Road Advisors, said Canadian investors are less concerned about recent talk of recession than they are about the volatility that struck the market last week as Chinese equity markets tanked.

"People are just reducing their risk exposure a little bit because nobody really knows," he said.

Last Monday, the recent downward spiral in Chinese shares accelerated as the Shanghai composite index fell 8.5 per cent. Worldwide markets reacted to the news with a broad sell-off, and the TSX fell more than 420 points on the day.

Yet those losses were offset by gains for both the TSX and the Shanghai indexes later in the week, and other major markets also showed significant volatility.

The widely watched Dow Jones industrial average shed 1,900 points early in the week before recouping almost 1,000 points in a two-day span, including a 619-point gain Wednesday that was its third-largest of all time and the biggest since October 2008.

"People aren't accustomed to the sort of volatility we saw last week and that's making them a bit more cautious," Raschkowan said.

The Dow Jones industrial average closed down 114.98 points on Monday at 16,528.03, while the broader S&P 500 index fell 16.69 points to 1,972.18. The Nasdaq dropped 51.81 points to 4,776.51.

The Shanghai Composite Index closed down 0.8 per cent after being down 2.6 per cent earlier in the session.

On the commodity markets, natural gas fell 2.6 cents to US$2.689 while gold fell $1.50 to US$1132.50 an ounce.

Oil advanced $3.98 to US$49.20.

Raschkowan said oil was rebounding off the lows it has hit as investors get a clearer picture of where big producers like Saudi Arabia will draw the line and begin to cut production.

"I wouldn't expect those prices to be sustained as we're approaching winter," he said.

The advance in oil prices came after the U.S. Energy Department cut its estimate for U.S. oil production, citing cutbacks in Texas. That helped make the energy sector the biggest gainer on the TSX, rising 3.1 per cent on the day.

It also benefited the oil-sensitive Canadian dollar, which ended that day up 0.34 of a U.S. cent at 76.01 cents US.

Raschkowan said It's hard to see what would cause the dollar to rise in the short term given the low price of oil, which has fallen by more than half since July 2014, and low prices for other key commodities that Canada exports.

News from © The Canadian Press, 2015
The Canadian Press

  • Popular kelowna News
View Site in: Desktop | Mobile