TORONTO – A political shakeup in Saudi Arabia, along with continuing signs of an economic slowdown in China, put pressure on commodity prices Monday, driving both the Toronto stock market and the Canadian dollar into the red.
The S&P/TSX composite index gave up 137.63 points to 13,563.84, piling onto a net loss of 250 points last week.
Gold, metals and energy were the heaviest weights, as the June contract for North American benchmark crude oil fell $1.22 to US$43.44 a barrel.
Crude prices are down after Saudi Arabia, OPEC’s largest oil producer, announced on Saturday that it has replaced its longtime oil minister as part of a bigger government shakeup.
“Any time you’re talking about uncertainty in the Middle East, as it relates to Saudi Arabia or OPEC, it’s going to be disruptive or, at least, volatility-inducing to oil prices,” said Craig Fehr, a Canadian market strategist at Edward Jones in St. Louis.
Ali al-Naimi had led the country’s Ministry of Petroleum and Mineral Resources since 1995. He has been credited with presiding over a controversial strategy of keeping production levels high amid lower oil prices for the past two years in an effort to drive more expensive producers in the U.S. and elsewhere out of the market.
Analysts estimate about one million barrels a day, or a quarter of Canada’s overall crude oil production, is offline because of the wildfires.
Meanwhile, Fehr said the impact of production cutbacks in the oilsands because of the fire near Fort McMuarry has been is minimal because global supply is already at peak levels.
“This has a fairly small impact on the global scale even though it’s a very large impact on a local and provincial scale,” he said.
Precious metal prices were also squeezed amid reports that China’s exports fell by 1.8 per cent in April from a year earlier and imports plunged 10.9 per cent, with both coming in lower than forecast by analysts.
China is a critical market for fuels and metals and investors are worried that the import and export data means demand is getting weaker.
June gold bullion plunged $27.40 to US$1,266.60 a troy ounce, while July copper shed five cents to US$2.11 a pound. June natural gas was unchanged at US$2.10 per mmBtu.
Lower commodities depressed the Canadian dollar, as the currency fell 0.27 of a U.S. cent to 77.14 cents US.
Meanwhile, New York markets were mixed amid a quiet week of economic news in the U.S. The Dow Jones industrials down 34.72 points at 17,705.91, while the S&P 500 added 1.55 points to 2,058.69. The Nasdaq rose 14.05 points to 4,750.21.
— With files from The Associated Press
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