TORONTO – United states markets continued their recent advance Tuesday on the strength of positive news from abroad, but at a more measured pace than the previous two sessions.
The S&P/TSX composite index rose 66.18 points to 14,599.40 following a more than 250-point surge over the prior two trading days as markets cheered an offer between cash-strapped Greece and it is creditors.
In New York, the Dow Jones industrial average was up 75.90 points at 18,053.58 after having soared more than 425 points within the same period. The Nasdaq jumped 33.38 points to 5,104.89, as the S&P 500 advanced 9.35 points to 2,108.95.
On commodity markets, the August crude contract recovered from early losses to increase 84 cents to US$53.04 a barrel despite a deal with Iran over its nuclear program. The deal could eventually lead to oil in the big Middle East producer flooding onto an already saturated market.
Norman Raschkowan, senior partner at Sage Road Advisory, said the lack of a dampening effect on oil prices was likely due in part to the fact that it will take time for Iranian oil to affect markets.
\”But I think perhaps the initial response was also that with that (the nuclear agreement) getting resolved with China perhaps stabilizing, maybe the outlook for global growth is a little better than everyone was expecting a week ago,\” he explained.
Elsewhere in commodities, August natural gas fell a lot more than two cents to US$2.84 per thousand cubic feet, while August gold gave back $1.90 to US$1,153.5 an oz.
Besides the deal with Iran, traders were also continuing to keep an eye on the situation in Greece in which the government of Pm Alexis Tsipras introduced legislation in parliament containing austerity measures which are expected to face spirited opposition.
\”I think individuals have assumed, and also the markets if you look at their response, are extremely assuming, that he is going to be successful,\” Raschkowan said.
\”There is unquestionably no guarantee of that and the risk is he faces a revolt and is forced to call an election or something like that and the whole process gets caught up again.\”
In other economic news, the loonie was unchanged at 78.49 U.S. cents prior to Wednesday\’s interest rate announcement by the Bank of Canada. There has been widespread speculation the central bank will lower its trend-setting policy rate because of a continuing slowdown throughout the economy.
However, Raschkowan noted that many observers think that a cut won\’t necessarily persuade folks to borrow more to boost the economy.
\”I don\’t see a lot of reason to cut rates, frankly,\” he said, adding it might probably drive the loonie lower.
That will be a boon for manufacturers in Central Canada but do little for that West, which is suffering through low energy prices.
\”It\’s a fascinating country to handle from a monetary policy standpoint that way,\” he explained.