Canada’s main stock index fell to its lowest close in more than two months on Tuesday as slumping oil prices weighed on energy shares and heavyweight banking and mining stocks also lost ground amid a broad retreat.
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The S&P/TSX Composite Index dropped 248.04 points to 14,349.10 and the S&P/TSX Venture Composite Index slipped 16.73 points to 797.17.
At 11:02am ET (1502 GMT) the Dow Jones Industrial Average was down 212.2 points, or 1.16 per cent, at 18,112.87.
With the price of oil lower, the Canadian dollar, which is closely linked to the movements of crude, lost 0.64 of a cent to reach 75.99 cents US.
On Monday, U.S. stocks closed near intraday highs (http://www.marketwatch.com/story/dow-futures-slump-more-than-100-points-as-rate-hike-fears-linger-2016-09-12) after comments from Federal Reserve Gov. Lael Brainard calmed market fears (http://blogs.marketwatch.com/capitolreport/2016/09/12/live-video-and-blog-of-brainard-speech-and-qa/) that the central bank will raise interest rates soon.
“Oil is acting as a barometer for the economy”, said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
Hawkish comments from Boston Fed President Eric Rosengren last week spurred expectations for a move by Fed policy makers at their September 20-21 meeting. However, after Brainard’s remarks, the probability of a rate increase next week fell to 15% from around 24%, according to the CME FedWatch Tool (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html). Goldman Sachs cuts its view to 25 percent from 40 percent.
The CBOE Volatility index, known as Wall Street’s “fear gauge” jumped almost 20 per cent to 18.10.
Even Apple’s 2.3 percent gain, after two USA carriers reported strong demand for the new iPhones, was not enough to pull up the indexes.
“A higher dollar and concerns about higher interest rates all dictate lower stocks”, Engelke said.
Freeport McMoRan tumbled 8.8 per cent, the most on the S&P, on a deal to sell some Gulf of Mexico assets to Anadarko Petroleum, which dipped only 0.2 per cent. Some analysts called the US$2 billion deal value affordable.
Declining issues outnumbered advancing ones on the NYSE by 2,338 to 406.
Meanwhile, the Nasdaq Composite Index fell 56.63 points, or 1.1%, at 5,155.25.
Oil blues: Oil prices settled sharply lower after the International Energy Agency warned demand growth is slowing at a faster (http://www.marketwatch.com/story/iea-cuts-oil-demand-forecasts-as-allure-of-cheap-prices-fades-2016-09-13) pace than initially predicted.
The IEA on Tuesday said a sharp slowdown in global oil demand growth, coupled with ballooning inventories and rising supply, means the crude market will be oversupplied at least through the first six months of 2017.
Crude oil fell US$1.27 per barrel to US$45.02 today in the wake of an IEA report forecast.
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Commodities were negative across the board, with the December contract for gold falling $1.90 to US$1,323.70 an ounce.
