North American stock markets are poised to rebound following the dramatic plunge they experienced Monday.
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The markets were reacting to deep sell-offs on Asian and European markets. That followed losses the day before of 8.5 per cent and 4.6 per cent, respectively.
Canada’s dollar wavered between gains and losses, and was up about one-tenth of a cent (0.12) at 75.28 cents U.S.
The Dow Jones industrial average fell more than 1,000 points in early trading before closing 588 points lower at 15,871 while the Standard & Poor’s 500 index fell into correction territory. Basic-resource producers led losses as Brent crude tumbled through US$45 a barrel. The rout is shaking confidence that the global economy will be strong enough to withstand higher U.S. interest rates, even as bets ease on a September increase.
Markets have been zigzagging for weeks on deepening unease over the ramifications of slowing growth in China, the world’s second-largest economy and the driver of much of the global growth of the past decade.
Tim Caulfield, director of equity research at Franklin Bissett Investment Management, said Canadians have reason to be hopeful after the pounding the Toronto market has taken since the price of oil began sliding. Seven of the index’s 10 main groups held on to their session gains. The benchmark has lost all of its gains for 2015, though it is still more than 40 per cent above its level a year ago.
The October crude contract was up 92 cents at US$39.16 a barrel and October natural gas contracts were up two cents at US$2.67. December gold was down $5.80 at US$1,153.80 an ounce and September copper fell five cents to US$2.26 a pound.
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The TSX/S&P composite index was ahead 287.02 points at 13,339.76 in mid-afternoon trading, after falling more than 420 points on Monday. But underlying the gloom is the growing conviction that policymakers and regulators may lack the means to staunch the losses. Jonathan Golub, chief market strategist at RBC Capital Markets, says the bloodbath in biotechnology and tech stocks is temporary, and investors should buy back the best performers of 2015.
