TORONTO – The Toronto stock market suffered another session of declines on Wednesday as oil settled below $50 the very first time in several months and also the loonie tumbled to its minimum in more than the usual decade.
The S&P/TSX composite index lost 69.12 suggests end at 14,307.12, dragged down by both energy and resource sectors.
Meanwhile, the Canadian dollar lost 0.53 of the cent to shut at 76.70 cents US, an amount it hasn\’t reached since Sept. 1, 2004.
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The loonie could fall even closer to 70 cents US in the coming months on the dismal mixture of weak recent Canadian economic data along with a rate cut in the Bank of Canada a week ago, said Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd.
\”Those would be the two things will truly drive the currency in the short term,\” he said. \”It\’s difficult to find an optimistic catalyst to get things to 80 (cents) or over.\”
Prices for oil are facing an identical battle for positive motivation after the latest figures in the U.S. government showed that a glut of oil supply drove inventories unexpectedly higher last week.
The September crude contract settled at its lowest level since April, closing down $1.67 to US$49.19 a barrel, after the data was launched. The TSX energy sector fell 1.1 per cent.
Oversupply could prove to become a recurring issue in the coming months as some U.S. oil rigs wind down output in an effort to curtail production against demand.
Until an account balance is reached, the expectations of traders who see a long oversupply in the market will likely continue to prove correct, Watson suggested.
\”There\’s no doubt the short-term supply bears are winning the argument right now and probably will continue to win that argument throughout this year and into the coming year,\” he said.
\”It\’s really difficult to paint a positive picture on where oil prices are going.\”
In other key commodities, the August natural gas contract rose 1.5 cents at US$2.897 while August gold lost US$12 at $1,091.50.
On Wall Street, stock markets were dealt a mix of disappointing is a result of major technology companies which both disappointed on their quarterly results or outlooks.
The Dow Jones industrial average dropped 68.25 points at 17,851.04, as the Nasdaq fell 36.35 suggests 5,171.77. The S&P 500 dipped 5.06 points to 2,114.15.
Leading the technology pack was Apple Inc. which emphasized its cautious outlook for the current quarter late Tuesday as its latest results showed slower iPhone sales figures. Its sales dropped 4.3 percent during the session.
Microsoft shares took a deeper hit, falling 3.8 percent, after it booked a cost of $8.4 billion from its purchase of Nokia at least a year ago and subsequent loss from it.
Yahoo also delivered a loss of almost $22 million for that quarter and its shares fell 1.2 percent.