The Toronto Stock Exchange was down Tuesday morning amid concern about the strength of China’s economy.
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The TSX closed down by 26 points on Monday, with financial and resource stocks leading the decline.
The energy subsector declined by 1.78 per cent on the day, while the gold subsector was the biggest gainer, adding 3.68 per cent.
Luciano Orengo, portfolio manager at Manulife Asset Management, said there will be more headwinds for the Toronto market as the supply of oil shows no signs of dropping even as soft global growth tamps down demand. “The problem in China is that the markets haven’t been released for free and open trading and until that happens there is going to continue to be downside pressure”, said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.
On the commodity markets, the December gold contract fell $4.10 to US$1,114.30 an ounce, the September crude contract was up 24 cents at US$42.11 a barrel and the September contract for natural gas was down two cents at US$2.71.
Volatility at the beginning of the summer after the Bank of Canada announced another cut to its benchmark interest rate, and a slide in oil to new lows, could have caused many market participants to delay their vacations, he said.
Iran is expected to increase its oil exports once Western sanctions are lifted after ratification of a recent nuclear deal.
In addition to being the world’s thirdlargest economy behind the United States and China, Japan is also the world’s thirdlargest consumer of oil.
“The good data on housing is certainly helpful since its 4 per cent of the U.S. GDP”, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
“As you get more negativity about oil and it feeds on itself, people go away”, he said.
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“Unless oil rebounds it’s hard to make a compelling case for the Canadian dollar”, he said.
