Oil down 3 per cent, TSX closes lower
Oil prices have been in sharp focus again Friday and US crude has dropped to near $35 with benchmark Brent crude below $38. Weaker energy stocks have hit all of the markets heavily with Asia, Europe and North America all closing lower; Japan’s Nikkei was the exception.
Along with decline for equities the US dollar is continuing to strengthen ahead of next week’s almost-certain interest rate rise, leaving other currencies in its wake. The Canadian dollar is down almost 1 per cent Friday.
Gold and copper prices are up though, some rare good news for producers.
The S&P/TSX Composite Index closed down 226.6 (1.74 per cent)
The Dow Jones closed down 309.5 (1.76 per cent)
Oil is trending lower (Brent $37.91, WTI $35.45 at 4.20pm)
Gold is trending higher (1075.50 at 4.20pm)
The loonie is valued at U$0.7279
Housing rules tightened by Ottawa
The finance minister announced that some homebuyers would need to find a higher downpayment in future. In a bid to cool the housing market, especially in Toronto and Vancouver, Bill Morneau said that he was acting to control risks, although was not reacting to any particular threat. The move had been expected but was not as severe as many had thought; the minimum downpayment will be 7.5 per cent on a home costing between $500,000 and $1 million rather than the current 5 per cent.
Analysts had talked of a 10 per cent minimum. Homes above $1 million are already subject to a 20 per cent minimum in order to receive government-backed mortgage insurance. While some experts say there will be a minimal impact for most, CIBC economist raised concerns about mid-value homes in Calgary, where the market has already cooled.
Canada’s raised net foreign investment
Statistics Canada has revealed that Canada’s net foreign investment position increased in the third quarter of 2015 as the weaker loonie meant international assets increased by more than liabilities. Over the quarter, the Canadian dollar lost 6.4 per cent against the US dollar, 6.6 per cent against the euro, 2.8 per cent against the British pound and 8.3 per cent against the Japanese yen. Lower global equity prices had a moderating effect on the gains in the net foreign asset position in the quarter. The decline in equity prices had a greater impact on the value of Canada's international assets than on its liabilities.