TSX begins another week on down note
The Canadian Press
Published Monday, January 18, 2016 12:45AM EST
Last Updated Monday, January 18, 2016 6:13PM EST
TORONTO -- The Toronto Stock Exchange failed to break out of its post-Christmas slump Monday, posting a triple-digit loss that brought the index down to levels last seen two and a half years ago.
The S&P/TSX composite index ended the day down 131.29 points at 11,942.17, continuing a three-week slide that has stripped it of almost 1,400 points or more than 10 per cent of its value.
Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, said the slide on the Canadian market has continued because of an absence of any good news on the markets.
"It looks like the path of least resistance is down for the market in the very near term," he said.
The last time the TSX closed below 12,000 points was in June 2013. The index is now down almost 23 per cent from its all-time high close of 15,657.63 set on Sept. 3, 2014.
American markets were closed Monday for the Martin Luther King Jr. holiday after having started the new year with their worst ever opening two-week period.
Both the Dow Jones industrial average and the broader S&P 500 index have fallen by more than 8.5 per cent since the Christmas break, while the tech-heavy Nasdaq has fallen by nearly 11 per cent.
"It's clear that a wave of pessimism has really started to set in for the equity markets," Fehr said.
Because of the holiday, commodity contracts did not settle. In late-day trading, February crude oil was down 48 cents at US$28.94 a barrel, a new 12-year low.
On Saturday, the United States and other world powers formally lifted international sanctions against Iran after that country suspended its nuclear program.
Iran, which has been prevented from fully participating in world oil markets, has said it plans to increase production by 500,000 barrels per day now that sanctions have been lifted.
The commodity-sensitive Canadian dollar fell 0.12 of a U.S. cent to settle at 68.70 cents US.
Fehr said the loonie has probably found an equilibrium between 65 and 70 cents US, as the price of oil nears a bottom.
He said markets have been ignoring the positive signs from the American economy as the focus has shifted to oil and the underperformance of China, where stock-market volatility and a faltering economy have dampened the outlook.
"If the U.S. is going to regain some momentum, gain some footing, a low loonie really is going to benefit the (Canadian) economy in terms of exports and we've seen flashes of that in the last several months," he said.
In other commodities, February natural gas added 2.4 cents to US$2.124 per mmBtu, while February gold lost US$1.80 to US$1,088.90 a troy ounce.