TORONTO – The Toronto stock market fell for a second day as oil prices softened on the eve of a highly-anticipated meeting by the Organization of the Petroleum Exporting Countries.
The S&P/TSX composite index lost 15.55 points to 14,999.81, with metals and energy stocks providing the biggest drag.
The January crude contract was down $1.85 at US$45.23 per barrel, as traders priced in an increasing likelihood that OPEC members won’t be able to agree on an output freeze or cut.
Momentum has been building for months that the 14-member cartel will be able to hash out details of a preliminary deal, which first emerged during an informal meeting in September. The group is set to meet on Wednesday in Vienna.
In the last few weeks, there was a growing belief that non-member Russia will also agree to participate if a deal were to materialize.
But in the past few days, those hopes have dissipated, as word got out about infighting between Iraq, Iran and Saudi Arabia, and how open they were to any output restrictions.
“We’ve seen oil prices fall by a sharp 3.5 per cent (today) with OPEC and Russia unable to craft this deal on production cuts,” said Todd Mattina, chief economist and strategist at Mackenzie Investments.
“Saudi Arabia really wants other cartel members, especially its regional rival Iran, to share more deeply in the production cuts. That’s really frustrating a deal at this point and getting priced into the oil price.”
The lower crude values weighed on the Canadian dollar, which declined 0.09 of a U.S. cent to 74.42 cents US despite a weakening greenback.
In corporate news, Scotiabank (TSX:BNS) was the first of Canada’s biggest five banks to release its latest quarterly earnings results. The bank reported a nine per cent increase in its fourth quarter, offering an encouraging sign to investors that it was still able to make $2 billion in profits in a low oil price environment.
Scotiabank’s revenue for the quarter was $6.75 billion, up from $6.13 billion a year earlier.
In other commodities, the February gold contract fell $3 to US$1,190.80 an ounce, March copper contracts were down six cents at US$2.61 a pound, and January natural gas contracts were barely changed at US$3.32 per mmBTU.
In New York, stock markets seemed to have scaled back the gains of a rally that picked up steam when Republican Donald Trump was elected the next president of the United States.
The Dow Jones industrial average gained 23.70 points to 19,121.60, while the S&P 500 rose 2.94 points to 2,204.66. The Nasdaq composite climbed 11.11 points at 5,379.92.
Mattina said indices are being more cautious as investors wait to see if Trump’s policies will result in major spending for infrastructure.
“The markets appear to be waiting for clarity in how the policies of president-elect Trump differ from candidate Trump,” he said.
“The markets remains in a pause until we see more clarity.”
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