Loonie falls a quarter of a cent; stock markets pause amid economic uncertainty

TORONTO – North American Stock markets finished relatively unchanged on Tuesday as investors paused after a dismal start to 2016 trading the previous session, which had led some to predict a year of volatility ahead.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 7.01 points at 12,920.14.

The weakness came on the heels of the index finishing Monday 82.80 points lower, as a sharp decline in China triggered a sell-off that spread worldwide.

Some of that intensity abated in the aftermath, with most major markets coming well off their lows of the day on Tuesday, after China injected cash into the country’s financial system.

Driving the TSX lower were consumer discretionary stocks, which fell 1.2 per cent overall, and the materials sector which dropped 0.7 per cent.

On Wall Street, the Dow Jones average of 30 stocks rose 9.72 points to 17,158.66 after falling 276.09 points Monday in its biggest decline in two weeks. The broader S&P 500 index closed up 4.05 points at 2,016.71 while Nasdaq edged down 11.66 points to 4,891.43.

Kash Pashootan, senior vice-president and portfolio manager at First Avenue Advisory, a Raymond James company, said stock markets are dealing with the hangover from Monday dramatic pullback in China.

“It’s a game of time,” said Pashootan.

“If the market searches long enough for the next growth catalyst and doesn’t find it, that’s when you’ll see sentiment shift from being positive and optimistic to becoming more bearish,” he added.

Those cautious sentiments were echoed in a currency market outlook from TD Bank, which predicted further pressure on the loonie.

“Given low commodity prices and weak growth in Canada, it is likely that the Canadian dollar will remain at current low levels for some time,” Bruce Cooper, chief investment officer at TD Bank, said in the note.

“We continue to believe that a diversified portfolio of high quality assets is the best way to navigate this challenging environment.”

Worries over high stockpiles of crude oil pushed the price of the key commodity to its lowest level in nearly two weeks.

The most recent supply figures will be issued on Wednesday by the U.S. Energy Information Administration, giving traders a better idea of how inventories and production stack up against a potential supply disruption as tensions develop between Iran and Saudi Arabia.

The February crude contract was down 79 cents at US$35.97 a barrel, while February natural gas gave back a penny to US$2.33 per mmBtu.

TSX gold stocks fell 0.4 per cent as February gold rose $3.20 to US$1,078.40 an ounce.

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Note to readers: This is a corrected story: A previous version erroneously said the gold sector rose 0.6 per cent