TSX drops 1.79 per cent as oil reverses again
Gold miners gained Monday but the familiar cocktail of declining oil prices taking energy and bank stocks lower saw a weak finish for the TSX.
Oil started the session higher on news of talks between Saudi Arabia and Venezuela, fuelling fresh hopes of a curb on OPEC production levels however with nothing confirmed the sentiment soon evaporated.
Many Asian markets were closed for the Lunar New Year with Tokyo the outperformer. European markets closed lower as concern about growth weighed.
Wall Street crawled back some of the losses but the three main indexes closed lower.
The S&P/TSX Composite Index closed down 228.6 (1.79 per cent)
The Dow Jones closed down 177.9 (1.10 per cent)
Oil is trending lower (Brent $33.14, WTI $30.12 at 4.50pm)
Gold is trending higher (1191.30 at 4.50pm)
The loonie is valued at U$0.7176
BoC suggests interest rates won’t be cut
The Bank of Canada said Monday that a reliance on monetary policy to stimulate the economy may not be the best way forward. Deputy governor Timothy Lane was speaking at a conference in Montreal and warned that using instruments such as lowering interest rates could lead to a less stable economy with increasing consumer debt. Mr Lane said that a balance between monetary policy and government spending could be the best answer, as long as public debt was not allowed to get out of control.
Canadians hoarding cash are shrewd not nervous says BMO
Canadians are not nervous about investing but just showing a shrewd sense of timing. That’s according to Bank of Montreal economist Doug Porter who responded to a recent report by CIBC that suggested that the $75 billion in cash being hoarded is being kept out of equities during the current turbulence in the markets. Porter wrote to clients that investment in equities is higher than normal with 36.3 per cent of household assets held in equities and mutual funds compared with a long-term average of 34.6 per cent.