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The Toronto stock market closed lower Monday as tepid manufacturing data and a higher U.S. dollar pushed oil to its lowest close in almost 2 ½ years.
The S&P/TSX composite index fell 75.7 points to 14,537.62.
The market was rattled by weak Chinese economic data and low oil prices affecting shares of Canadian energy companies.
Chinese services sector growth dropped to a nine-month low this month, raising concerns about a potential slowdown in the second biggest economy in the world.
Commodity prices (oil and bullion) have been under pressure with an increasing dollar (since the Bank of Japan announced its stimulus program).
The Toronto energy sector has nosedived since the summer (losing around 25% of its value since June). It was 2.4 percent lower, having the biggest impact on the index as a whole. Canadian Natural Resources Ltd sank by 2.7 percent to C$38.28, and Suncor Energy Inc dropped by 3.6 percent to C$38.57.
Marcus Xu, portfolio manager and president at M.Y. Capital Management Corp in Vancouver, told Reuters:
“We’ve had another bad day for oil. The U.S. dollar trade is putting commodities down,” adding that “a lot of people are sitting on the sidelines.”
However, energy shares are now at discount prices, which could lure more investors.
Xu said that “there’s a big discount,” and that people “can pick and choose some high-quality names that will be around for a long time.”
Agencies/Canadajournal
