TSX tumbles 178 points as energy stocks sell off on oil price collapse - InfoNews

Current Conditions


TSX tumbles 178 points as energy stocks sell off on oil price collapse

November 28, 2014 - 2:10 PM

TORONTO - The Toronto stock market extended its losses Friday as energy stocks continued to sell off in the wake of a collapse in oil prices while miners and copper prices fell heavily on Chinese economic concerns.

The S&P/TSX composite index dropped 177.74 points to 14,744.70 on top of a 116-point slide Thursday after the OPEC oil cartel opted to leave its daily output unchanged at 30 million barrels a day, rejecting intense lobbying by some of its 12 members to cut production to put a floor under prices.

American markets had been closed for U.S. Thanksgiving on Thursday. But on Friday, the January crude contract on the New York Mercantile Exchange plunged $7.54 from Wednesday's closing price to a five-year low of US$66.15 a barrel and sending the TSX energy sector down 2.25 per cent.

Oil prices now are down about 35 per cent from mid-summer highs because of a higher U.S. dollar, lower demand and most particularly, a glut of global supply.

And analysts say they wouldn't be surprised to see prices further depressed as Saudi Arabia, the biggest OPEC exporter and one of its lowest-cost producers, appears prepared for short-term pain in order to compete against U.S. producers in efforts to maintain market share.

"The Saudis have a trillion dollars of reserves, about five years worth of spending for them," observed Luciano Orengo, a portfolio manager at Manulife Asset Management, adding some U.S. producers are especially vulnerable due to high debt levels.

"What you want to do if you're a producer like the Saudis, a low-cost producer that has reserves, you want to maximize the value of that and don't lose market share to new production in the U.S."

Plunging energy prices also punished the Canadian dollar, which lost 0.84 of a cent to 87.41 cents US, on top of a 0.75 of a cent slide Thursday, even as Statistics Canada reported that third-quarter gross domestic product ran ahead at an annualized pace of 2.8 per cent. That was much higher than the 2.1 per cent rise that economists had expected.

U.S. indexes were little changed at the end of a shortened session, benefiting from lighter exposure to resource companies versus the TSX. The Dow Jones industrials gained 0.49 of a point to 17,828.24, the Nasdaq added 4.31 points to 4,791.63 while the S&P 500 index faded 5.27 points to 2,067.56.

The TSX also found pressure from another major pillar — the mining sector as metal prices also retreated.

The base metals sector dropped 5.1 per cent as March copper declined 11 cents to US$2.85 a pound. Copper hasn't broken below $3 since 2010. The decision by the Chinese central bank to lower interest rates got a positive reception a week ago. But since then, there have been concerns that the move isn't enough to keep Chinese growth above seven per cent.

Gold prices were heavily punished since lower oil prices will translate into lower inflation. The TSX gold sector fell about 6.35 per cent while February gold lost $22 to US$1,175.50 an ounce.

TSX gainers were led by the utilities and consumer staples sectors, both up 0.6 per cent.

The TSX was down 366 points or 2.43 per cent for the week after six straight weeks of gains, led by a 12 per cent slide in the energy sector. The Dow was flat.

News from © The Canadian Press, 2014
The Canadian Press

  • Popular penticton News
  • Comments
  • New mountain highway proposed between Red Deer and Kamloops
    An Alberta development group is pitching the idea of a new highway linking central Alberta to B.C. cutting through the mountains and a section of Banff National Park. The Central Alberta Eco
  • Kamloops firefighter back at work after co-workers saved his life
    Four months after his co-workers saved his life, a Kamloops firefighter is back at work. Mike Silva has been working with Kamloops Fire Rescue for 15 years and was enjoying some time off in
  • Pier 1 closing all of its stores in Canada
    Pier 1 Imports, Inc. announced today that it has entered into bankruptcy protection and is pursuing a sale. The retailer  commenced voluntary Chapter 11 proceedings in the U.S. Bankrupt
  • West Kelowna's Bull Mountain glistens for its close-up
    It’s not a secret that West Kelowna’s family ski hill is getting infused with new life. Bull Mountain Adventure Park is being built on the remnants of Crystal Mountain Resort, an
  • Vernon family captures mesmerizing melting ice
    A Vernon family was on their way home from Kelowna when they made a pit stop after noticing a beautiful scene along Wood Lake. Matthew Royal and his daughters noticed how “cool”
View Site in: Desktop | Mobile