The Canadian dollar dipped to a 13-year low Tuesday, closing for the day below US$0.70.
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Crude oil steadied near $32 per barrel on Tuesday, recovering slightly as investors booked profits after it fell to a near-12-year low on concerns about oversupply and fragile demand from China. “I believe there are opportunities … there are also challenges”.
The loonie was trading at 70.15 cents United States, down 0.01 of a cent just before noon.
Sadiq Adatia, chief investment officer at Sun Life Global Investments, said the Bank of Canada is eyeing the low price of oil as it considers where to take its benchmark interest rates after cutting them twice a year ago. “It’s not something that’s in our control”. The metals and mining sector was the biggest loser on the TSX, dropping more than three per cent. Industrials stocks lost roughly 2.7 per cent.
Patrick Leblond, an expert in finance at the University of Ottawa, said recent volatility in stock markets around the world and global economic uncertainty is causing people to flee for the safe haven of U.S. Treasury bonds.
“Who knows if at some point the bargain hunters might start to step in again?”
On the commodity markets, the February gold contract was up $1.90 at US$1,087.10 an ounce and the crude contract was up 77 cents at US$31.21 per barrel.
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It mostly traded below 70 US cents between 1997 and 2003, a period when manufacturing made up a larger part of exports than oil. “It’s a sign that the economy is doing well, and that, in the long run, is positive for corporate earnings and should be good for stocks”.
