TORONTO, O.N. – Canada’s main stock market resumed its downward trajectory Wednesday as energy stocks failed to get a lift even though crude oil prices hit nearly a nine-week high.
There was a disconnect as the overall market didn’t benefit from higher commodity prices because of uncertainty over NAFTA negotiations, said Candice Bangsund, vice-president and portfolio manager for Fiera Capital.
“We’re not there yet and I think the market is just expressing a little bit of caution there and just waiting for some sort of tangible news on the NAFTA front,” she said in an interview.
“That NAFTA overhang has really weighed on the index fairly generally and the hope is that we do get some sort of positive news on that front and likely could see a relief rally on Canadian stocks.”
The S&P/TSX composite index closed down 45.23 points to 16,049.02, after hitting a low of 15,993.58 on 266.3 million shares traded. The decrease came a day after the market hit its first daily gain in September.
Market heavyweights industrials, financials and energy all closed down.
Gold, materials and base metals led on the positive because of a lower U.S. dollar and hope that a solution could be found in the U.S. trade dispute with China after a report said that the Americans were seeking new trade talks before even imposing new tariffs.
“We find this to be fairly encouraging and I think the market is tentatively, cautiously optimistic so that’s why you’re not seeing a strong relief rally,” Bangsund said.
Offsetting the hope was a down day in the United States for the market-heavy U.S. technology sector.
In New York, the Dow Jones industrial average gained 27.86 points to 25,998.92. The S&P 500 index was up 1.03 points to 2,888.92, while the Nasdaq composite was off 18.24 points to 7,954.23.
The Canadian dollar was trading at an average of 76.84 cents US compared with an average of 76.22 cents US on Tuesday.
The gain came as the October crude contract was up US$1.12 at US$70.37 per barrel, the highest level since July 13.
The improvement was driven by the U.S. producer price index posting its first monthly decline in 18 months, a weaker U.S. greenback against several currencies and concern about the impact of Hurricane Florence that is set to hit the U.S. southeastern coast.
“On the oil front we saw a larger than expected weekly drawdown in crude stockpiles so this is contributing to an already fairly tight crude market,” she added.
The October natural gas contract was up 0.1 of a cent at US$2.83 per mmBTU.
The December gold contract was up $8.70 to US$1,210.90 an ounce and the December copper contract was up 5.4 cents at US$2.68 a pound.
(THE CANADIAN PRESS)