Toronto stock market slips lower as crude prices drive down energy sector

Toronto stock market slips lower as crude prices drive down energy sector

TORONTO — Canada’s main stock index moved lower midweek as falling crude oil prices hurt the energy sector.

The S&P/TSX composite index closed down 87.14 points at 15,428.69.

The energy sector was the big loser, plunging 4.2 per cent as oil prices fell after the U.S. government said the weekly stockpiles reached the highest level on record.

That reflects the fact that crude markets “continue to grapple with stubbornly elevated inventories,” said Candice Bangsund, portfolio manager for Fiera Capital.

The August crude contract was down 44 cents at US$38.21 per barrel and the July natural gas contract was up 2.4 cents at nearly US$1.64 per mmBTU.

Shares of several Canadian oil producers dropped with Crescent Point Energy Corp. down 7.9 per cent.

Nine of the 11 major sectors of the TSX were lower.

Health care decreased as shares of Hexo Corp. sank nearly 12 per cent.

Materials and industrials inched higher. Centerra Gold Inc. and B2Gold Corp. rose 3.2 and 2.5 per cent respectively despite a dip in gold prices.

The August gold contract was down 90 cents at US$1,735.60 an ounce and the July copper contract was up 2.5 cents at nearly US$2.59 a pound.

Industrials was helped by gains from Bombardier Inc. and Canadian National Railway Co.

The Canadian dollar recovered from morning weakness to trade for 73.77 cents US by late afternoon compared with 73.76 cents US on Tuesday.

The loonie initially slid “alongside the declining crude prices but the softer-than-expected inflation numbers this morning also weighed on the Canadian dollar,” Bangsund said in an interview.

The annual pace of inflation pulled back even further in May due to a drop in gasoline prices as the consumer price index fell 0.4 per cent compared with a year ago, making it the second month in a row for negative inflation after a 0.2 per cent drop for April.

Economists on average expected the consumer price index to remain unchanged compared with a year ago — meaning an annual inflation rate of zero.

In New York, the Dow Jones industrial average was down 170.37 points at 26,119.61 after dropping late in afternoon trading. The S&P 500 index was down 11.25 points at 3,113.49, while the Nasdaq composite was up 14.66 points at 9,910.53.

“The market action today is fairly mixed. Not really much in the way of notable economic or central bank developments,” Bangsund said.

Federal Reserve chairman Jerome Powell testified again to Congress but this time reinforced the need for more fiscal support.

On Tuesday, he told a Senate committee about the state of the economy and the evolution of the recovery.

“But today equities have largely been striving for direction. After such a strong run-up, essentially investors are weighing an increase in COVID cases across the U.S. and China against the abundance of policy support,” she said.

Investors have been unfazed by new cases of coronavirus in Beijing that prompted the closure of schools and cancellation of flights.

Bangsund said that underscores the resilience of equity markets and the monetary and fiscal stimulus that ”has ultimately placed a floor under equity markets and helped to boost sentiment.”

This report by The Canadian Press was first published June 17, 2020.

Companies in this story: (TSX:CPG, TSX:CG, TSX:BBD.B, TSX:CNR, TSX:HEXO, TSX:BTO, TSX:GSPTSE, TSX:CADUSD=X)

Ross Marowits, The Canadian Press

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