TORONTO – The Toronto stock market gained ground in volatile trading Wednesday as oil prices rose and the U.S. central bank said it would leave its overnight interest rate unchanged.
The S&P/TSX composite index added 46.45 points to end the day at 12,377.77, after rising 188 points on Tuesday.
The TSX is still down nearly 1,000 points from Dec. 24 as continuing worries about the price of oil, global growth and China’s economic performance have weighed on markets.
New York markets dropped sharply after the U.S. Federal Reserve said it was holding steady on its benchmark overnight lending rate.
The Dow Jones Industrial average plummeted 222.77 points to close at 15,944.46, the broader S&P 500 index dropped 20.68 points to 1,882.95, and the Nasdaq fell 99.50 points to 4,468.17.
The Fed pledged to closely monitor developments in the global economy and financial markets, but said it still foresees a path of gradual rate increases despite slowing economic growth.
Since the Fed raised rates Dec. 16 from record lows, stock markets have plunged, oil prices have skidded and China’s leaders have struggled to manage a slowdown in the world’s second-biggest economy.
The most visible sign of the economic fear has been the sharp fall in the stock market. The Dow Jones industrial average shed more than seven per cent of its value in the first three trading weeks of 2016.
China has unnerved investors because of an economic slowdown that Beijing seems incapable of reversing, while the country’s decelerating growth has shrunk global commodity prices.
Last week, the price of oil reached a 12-year low of $28.15 a barrel before rebounding slightly this week.
On Wednesday, the March crude contract rose 85 cents to settle at US$32.30 a barrel despite a rise in American oil inventories reported by the U.S. Energy Information Administration. Still, that was well down from the $105 price it commanded in June 2014.
Patrick Blais, senior portfolio manager at Manulife Asset Management, said that if oil stays at these levels the Canadian economy is in for some difficult adjustments.
“That it will only impact one region, I think there’s a lot of risk in that statement,” he said. “It’s only natural to think of the impact on other industries as well as just overall confidence in the consumer.”
The loonie lost 0.14 of a U.S. cent to 70.91 cents US.
Blais said that while the low loonie should provide a long-term boost to Canadian exports and has other beneficial effects, in the short term it will hurt consumers’ pocketbooks because of price hikes for food, electronics and other imported goods.
In other commodities, the February gold contract fell $4.40 to US$1,115.80 an ounce and March natural gas dropped one tenth of a cent to US$2.157 per mmBtu.
— With files from the Associated Press
Note to readers: This is a corrected story. An earlier version said the intraday low for crude futures was just above $31 a barrel, not $30 a barrel.