TORONTO – Stock markets in Toronto and New York started the week in the red, pushed lower by falling oil and copper prices and some disappointing U.S. earnings results.
The S&P/TSX composite index closed down 78.01 points at 13,795.99, with the metals and energy sectors the major weights Monday as the June contract for benchmark North American crude stepped back $1.09 to close at US$42.64 a barrel
The decline impacted the Canadian dollar, which dipped 0.09 of a U.S. cent to 78.83 cents US.
“(The majority) of the movement in the loonie is tied to oil and has been for the past 15 years,” said Philip Petursson, chief investment strategist at Manulife Investments.
As such, investors can expect volatility in the currency to continue as crude prices remain temperamental.
“We’re still at an excess supply situation. As long as we have greater supply than demand, then the price can stay low. . . . (But) if we get to that US$50 level, we’re looking at an 80 cent Canadian dollar again.”
Elsewhere in commodities, May copper shed a penny to US$2.25 a pound, while June natural gas lost eight cents to US$2.19 per mmBTu. June gold bullion rose $10.20 to US$1,240.20 a troy ounce.
New York markets also turned lower amid disappointing earnings reports from document company Xerox (NYSE:XRX) and Irish drugmaker Perrigo (NYSE:PRGO).
Xerox shares lost more than 13 per cent, to US$9.68, as the company reported its profits fell 85 per cent and its plans to cut its outlook on future earnings.
Meanwhile, Perrigo’s (NYSE:PRGO) stock plunged 18 per cent after cutting its earnings outlook as a result of lower prices for its products in Europe.
Perrigo is also losing its longtime CEO, Joseph Papa, who resigned to take over the top job at Quebec-based Valeant Pharmaceuticals International Inc. (TSX:VRX) (NYSE:VRX). Valeant shed 81 cents to US$35.17 in New York and was down 72 cents at $44.85 in Toronto.
The Dow Jones industrial average closed down 26.51 points at 17,977.24, while the broader S&P 500 fell 3.79 points to 2,087.79 and the Nasdaq dipped 10.44 points to 4,895.79.
Investors are preoccupied this week with the latest policy-rate meeting of the U.S. Federal Reserve Board. The central bank is set to meet on Tuesday and Wednesday, and although few expect the Fed to raise rates, they will be watching for comments on how the bankers view the U.S. and global economies.
Most economists expect June to be the earliest a rate hike will be announced, with some not anticipating action until July.
“It seems like they’re very hesitant and finding any number of excuses to delay a rate hike,” said Petursson. “Be it China, be it market volatility… It’s more what is the tone of the message that they’re going to convey? Is it a little more hawkish or does it remain dovish?”
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