TORONTO – The Toronto Stock market closed lower for that third straight session as investors direct their attention to the fundamentals of the Canadian market.
The S&P/TSX composite index lost 49.31 points to close at 14,376.24 after starting the day in the black.
Allan Small, senior investment adviser at Holliswealth, said the markets had been positive following the resolution of the latest outbreak within the Greek debt crisis as well as last week\’s rate cut in the Bank of Canada.
With those headline-grabbing developments taken care of, he said, investors are turning back to look at the realities of the market and aren\’t liking the things they see.
\”We had our rally, and now we\’re concentrating on other areas of the marketplace,\” he explained. \”And right now in Canada those other locations are struggling.\”
In the U.S., the Dow Jones industrial average plunged 181.12 suggests 17,919.29, as the Nasdaq fell 10.74 points to 5,208.12. The S&P 500 lost 9.07 points to close at 2,119.21.
The Canadian dollar was up 0.29 of the cent to 77.23 cents US.
Small said the rise was the result of day-to-day volatility instead of any sign the sliding loonie had reached bottom.
\”The direction of our dollar is certainly down,\” he said. \”I\’d be surprised when we see a big run-up within the dollar now.\”
The Canadian dollar could fall even further against the greenback, Small said, and will remain weak for the near future as Canada looks to grow.
\”How long it\’ll stay that way remains to be seen,\” he explained. \”I think it\’s determined by how long it requires our economy to recover from a negative first half.\”
Economists and analysts have suggested that Canada is in a technical recession, understood to be two consecutive quarters of negative growth, although final second-quarter numbers have not been released.
Small said the possibilities of an interest-rate hike in the American central bank this fall may be the biggest driver for the Canadian dollar\’s value.
\”Our dollar is going to trade more on what the U.S. does than we do within our country,\” he explained.
On the commodities markets, the September agreement for crude oil closed up 42 cents to US$50.86, as the August contract for natural gas climbed 5.9 cents to US$2.882.
The August agreement for gold ended the day down US$3.50 to US$1,103.50 per ounce.
Small noted that gold is becoming much less important as a safe-haven commodity as global markets have equalized following the volatility of the 2008 downturn, when gold\’s value spiked.
\”I really don\’t see a catalyst for gold to visit any higher,\” Small said.
The September agreement for copper closed at US$2.47, down 0.7 of a US cent.
The Canadian Press