TORONTO – The Toronto stock market pulled back at the close Wednesday amid lower commodity prices and cautious comments on interest rates and the global economic recovery from the head of the U.S. Federal Reserve.
The S&P/TSX composite index fell 96.93 points to 12,185.72, its fourth consecutive losing session. The Canadian dollar was off 0.28 of a U.S. cent at 71.77 cents US.
Oil continued its downward trajectory, with the March contract losing another 49 cents to settle at US$27.45 a barrel. The last time the price of benchmark crude hovered around these levels was more than a decade ago when it slumped to US$26.96 a barrel in September 2003.
Other commodities were also negative, with March natural gas shedding five cents to US$2.05 per mmBtu, while April gold fell $4 to US$1,194.60 a troy ounce. March copper dipped a penny to US$2.02 a pound.
New York indexes were mixed after Fed chairwoman Janet Yellen told Congress that the U.S. central bank still plans to gradually raise interest rates, but will do so while keeping an eye on the weak global economic recovery.
The Dow Jones industrial average dropped 99.64 points to 15,914.74, while the broader S&P 500 lost 0.35 of a point to 1,851.86. The Nasdaq composite gained 14.83 points to 4,283.59.
Yellen repeated the Fed’s confidence that the U.S. economy was on track for stronger growth and a rebound in inflation, but that there were still global concerns, particularly for China’s economic outlook and currency.
“It is fairly obvious that the Fed is not likely to reverse course on the rates rise,” said Jean-Francois Dion, vice-president and portfolio manager at RBC World Markets. “This idea of the Fed actually cutting rates in response to the growing global risks surfacing in markets is fairly unlikely.”
But Dion said the comments also showed how “progressive and flexible” the Fed will continue to be amid economic uncertainty.
Yellen is set to give two days of testimony before Congress, and Wednesday’s comments mark the first time she has spoken publicly since December when the Fed raised rates for the first time in nearly a decade.
Originally, economists had expected the Fed to boost its benchmark rate in March but now believe the next move won’t likely happen until June.
Overseas, Germany’s DAX advanced 1.6 per cent, France’s CAC 40 rose 1.6 per cent and Britain’s FTSE 100 added 0.7 per cent.
In Asia, Japan’s Nikkei 225 sank 2.3 per cent and is down about 11 per cent in the past month. Markets were closed in China, Taiwan, Hong Kong and South Korea for Lunar New Year holidays. Hong Kong and Korea reopen on Thursday and China and Taiwan resume trading Monday.
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