Materials gain but Brexit fears dominate session
Global concern over the UK’s potential exit from the European Union – and the effects it may have – dominated the world’s equity markets Monday. The main worry is whether a ‘leave’ vote could tip the Eurozone into recession.
The main index of the TSX had seen some gains thanks to stronger resources stocks but the wave of Brexit fear proved a drag on all the major markets.
The strength for resources was driven by gold and other metals as the likelihood of a Fed interest rate rise this week was deemed to be slim.
Oil continued its decline though for a third consecutive session.
Toronto’s losses were relatively small compared to the Dow which suffered a triple-digit slump; Most European and Asian indexes closed 2-3 per cent lower.
The S&P/TSX Composite Index closed down 43.66 (0.31 per cent)
The Dow Jones closed down 132.9 (0.74 per cent)
Oil is trending lower (Brent $50.05, WTI $48.58 at 4.15pm)
Gold is trending higher (1287.30 at 4.15pm)
The loonie is valued at U$0.7809
BC will lead Canadian economy to 1.5 per cent growth
Canada’s economy will grow 1.5 per cent in 2016 according to the latest report from the Conference Board.
However, there will be disparity in growth across the country with British Columbia leading the gains with 3 per cent growth this year and in 2017 while Alberta will suffer the largest contraction at 2 per cent.
Ontario will see growth of 2.8 per cent (2.6 in 2017); Manitoba 2.1 per cent (2.6 in 2017); and PEI 2.3 per cent (1.7 per cent in 2017).
There will be contraction of 0.4 per cent for New Brunswick while Saskatchewan and Newfoundland and Labrador will be flat this year.
Net international investment near 2-year low
Canada’s net foreign asset position dropped in the first quarter of 2016, erasing the gain of the previous quarter. The $220.2 billion decline to $264.8 billion came as the country’s net international liabilities gained.
Statistics Canada reported that it is the first time that the net international investment position was lower, since the second quarter of 2014; Canada is now a net foreign creditor.
The appreciation of the Canadian dollar, combined with the stronger performance of the Canadian stock market relative to foreign stock markets, mainly contributed to the decline in the net foreign asset position. Net borrowings from abroad to finance an ongoing current account deficit also added to the decrease in the quarter.