TORONTO – Investors in the Toronto stock market got a small respite on Wednesday after two days of heavy losses on North American exchanges as resource shares recovered slightly.
The S&P/TSX composite index ended the day up 15.12 points at 12,937.59, after losing 436 points over the previous two sessions.
Kash Pashootan, senior vice-president and portfolio manager at First Avenue Advisory, a Raymond James company, said the market has returned to normal valuations after years of overinflated returns.
He said a normalized trading market means the near future for the Canadian market looks grim as the oilpatch stumbles and other industries don’t seem to be picking up the slack.
“We have a handful of reasons to think that growth is going to be hampered in 2016,” he said.
“What we don’t have is much clarity on where growth is going to come from and what catalysts are going to take this market higher.”
In New York, all three major markets posted losses for a third straight day. The Dow Jones average of 30 stocks lost 75.7 points to close at 17,492.30, the broader S&P 500 fell 15.97 points to 2,047.62 and the Nasdaq fell 75.37 points to close at 5,022.87.
Markets have suffered as the price of oil has fallen rapidly following the announcement by OPEC on Friday that its member countries would maintain production despite a worldwide supply glut.
The January contract for benchmark crude oil ended trading down 35 cents at US$37.16 a barrel. It fell below $40 last week for the first time since August.
Despite oil’s fall, pipeline company TransCanada Corp. (TSX:TRP) was the biggest gainer on the TSX, up nearly 6.8 per cent after announcing a share buy-back program late Tuesday. Another big pipeline company, Enbridge Inc. (TSX:ENB), rose more than three per cent.
The biggest loser on the day was TMX Group Ltd., owner of the Toronto stock market, which fell by more than 10 per cent after American market heavyweight Nasdaq Inc. announced Tuesday that it was buying alternative market Chi-X Canada.
“A more competitive landscape is always better for the consumer, but it puts short-term uncertainty and pricing power pressure on the current market leader, the TMX Group,” Pashootan said.
In other commodities, January natural gas fell 0.8 of a cent to settle at US$2.062 per mmBtu and February gold added $1.20 to US$1.076.50 an ounce.
“It’s very difficult to see how commodity prices are going to rise in an environment where you have China continuing to slow and the U.S. dollar continuing to be strong,” Pashootan said.
The Canadian dollar rose 0.12 of a cent to 73.72 cents U.S., rebounding slightly from two-day slide that saw the loonie lose more than a cent in value since its close on Friday.