TORONTO – North American stock markets took a breather Thursday, while falling energy prices pulled down the Canadian dollar after the loonie hit a nine-month high earlier in the week.
The S&P/TSX composite index in Toronto faded 3.06 points to 13,668.29, with gold and energy issues the biggest weight. The decline came after the resource-heavy market jumped more than 400 points over the previous four sessions.
Weakened commodities also undercut support for the loonie, which fell 0.20 of a U.S. cent to 77.83 cents US.
The May contract for benchmark North American crude lost 26 cents to US$41.50 a barrel after the International Energy Agency questioned in its latest report whether a production freeze by OPEC producers would result in a material change in oil prices or global supplies.
Several members of the Organization of the Petroleum Exporting Countries are to meet Sunday in Doha, Qatar, in hopes of hammering out a deal to freeze production and spur a rise in prices. The price of crude has steadily fallen since 2014, when it was trading at more than US$100 a barrel.
“Simply freezing production where it stands, particularly given that we’ve got relatively modest global demand at the moment, is unlikely going to have the dramatic effect of sending prices higher,” said Craig Fehr, a Canadian market strategist at Edward Jones in St. Louis.
“A more dramatic cut to global production is probably necessary to see a material spike in crude prices.”
Fehr cautioned that even OPEC agrees to a freeze, or even a cut, it would not necessarily decrease the glut in world oil supplies because other producers who have scaled back, particularly in the U.S., might use it as an opportunity to come online again.
In other commodities, May natural gas fell seven cents to US$1.97 per mmBtu, while May copper was unchanged at US$2.17 a pound.
June gold was lower for a second straight day, losing $21.80 to US$1,226.50 a troy ounce.
New York markets were barely changed, with the Dow Jones industrials up 18.15 points at 17,926.43, while the broader S&P 500 was flat, gaining 0.36 of a point to 2,082.78. The Nasdaq lost 1.53 points to 4,945.89.
In economic news, the U.S. Labor Department reported that claims for unemployment benefits dropped 13,000 to a seasonally adjusted 253,000 in March, the lowest level since 1973.
It also reported that U.S. consumer prices rose a modest 0.1 per cent in March as a drop in grocery prices offset higher energy costs. Over the past year, overall US consumer prices are up just 0.9 per cent and core inflation 2.2 per cent.
Fehr said although economic data is important, investors will more likely be paying close attention in the next few weeks to the health of corporate firms as earnings season gets well underway.
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