TORONTO – The Toronto stock market weakened Monday like a steep stop by oil prices and fallout in the resounding \”no\” vote within the Greek debt referendum pulled most major sectors lower.
The S&P/TSX ended the session down 88.82 points to 14,593.57.
Oil prices closed at their lowest level within three months using the August crude contract dropping $4.40 to US$52.53 a barrel.
Although Greek voters rejected a possible bailout deal with the nation\’s creditors, one of the greatest drags on the TSX was a further decline in oil prices, said Kevin Headland, director from the portfolio advisory group at Manulife Asset Management.
\”I don\’t believe we\’re that associated with the Greece issue,\” he said. \”If there are further issues in Europe it could hurt some of our exports, perhaps oil, but ultimately Europe hasn\’t traditionally been a large trading partner with Canada.\”
Headland said oil prices could fall even more because of tepid forecasts for global economic growth in addition to changes that may develop from negotiations over Iran\’s nuclear program.
If a nuclear agreement is reached, Western sanctions would be lifted which could open the floodgates of supply from the oil-rich nation. Without sanctions on Iran the already overabundant way to obtain oil from other countries could drive international prices down further.
\”There\’s more disadvantage to global growth expectations than upside, and global growth is directly associated with demand for energy and oil,\” he explained.
In New York, the Dow Jones industrial average fell 46.53 points at 17,683.58, as the Nasdaq lost 17.27 points to 4,991.94 and the S&P 500 fell 8.02 suggests 2,068.76.
The Canadian dollar ended down 0.58 of a U.S. cent to 79.04 cents US, its fifth consecutive day\’s decline.
The loonie continues to be under renewed pressure since speculation began heating up last week on the possible interest rate cut from the Bank of Canada amid fears the country is in an economic downturn – understood to be two consecutive quarters of negative economic growth.
The August gold contract rose $9.70 to US$1,173.20 an oz, with the TSX gold sector was one of the greatest gainers of the day, rising 1.8 per cent.
Gold is considered a relative safe haven in times of economic turmoil and fears over possible fallout from the Greek debt crisis have prompted investors to move into less riskier assets.
In economic news, the Bank of Canada reported a slight overall improvement in optimism among Canadian business in its summer outlook survey.
But as with other recent surveys, pessimism in oil-producing provinces would be a counterweight to the improved outlook in non-oil producing regions, including the manufacturing centres of Central Canada.