TSX falls on oil, global demand
Oil prices headed closer to $30 Monday as concerns over global demand and the effects of the strong US dollar weighed. A report from Morgan Stanley cited the greenback as potentially pushing crude prices as low as $20.
Other commodities are also under pressure and energy and mining stocks were among the biggest drags.
Wall Street managed a better session with only the Nasdaq closing lower while the S&P and Dow Jones closed with slim gains.
Elsewhere told a similar story to Toronto with Asian and European markets almost universally lower.
The S&P/TSX Composite Index closed down 126.2 (1.01 per cent)
The Dow Jones closed up 52.12 (0.32 per cent)
Oil is trending lower (Brent $31.19, WTI $31.16 at 4.20pm)
Gold is trending lower (1094.80 at 4.20pm)
The loonie is valued at U$0.7035
Bank of Canada v Finance Minister
There were two snapshots of the year ahead Monday but they seemed to tell different stories. An outlook from the Bank of Canada shows hiring and investment intentions at lows not seen since the 2009 recession as the effects of lower oil prices spread to wider parts of the economy. The businesses surveyed towards the end of 2015 are expecting sales growth with those exporting to the US particularly optimistic but some experts are already talking about another recession ahead.
Meanwhile federal finance minister Bill Morneau spoke in Halifax and said that he is “optimistic” about the year ahead because “we have a plan.” Despite reports suggesting a slower pace of growth, possibly even turning negative, Mr Morneau said that the policies of the government, including lower tax for middle classes would give businesses confidence to invest.
Another interest rate cut?
Bank of America Merrill Lynch told its clients that the weakness in the oil industry spreading out to other industries will prompt a further interest rate cut by the BoC when it meets on January 20. In a note to investors the bank called for a cut of 25 basis points, although most economists believe that a further cut is unlikely for now. BoA also suggests that the fourth quarter of 2015 will show decline of 0.5 per cent rather than the BoC’s October estimate of 1.5 per cent growth. The note cites oil prices which the central bank’s estimate estimated at $45 but which have fallen to $31.