TORONTO – Stock indexes in Toronto and New York were trading in different directions Thursday amid little economic guidance and a decision by the European Central Bank to hold interest rates steady until it knows the full impact of Britain’s vote to leave the European Union.
The S&P/TSX composite index was up by 32.26 points at 14,565.83, boosted by positive earnings reports from Rogers Communications Inc. (TSX:RCI.B) and Encana Corp. (TSX:ECA).
Most of the Toronto subindexes were also higher, with the biggest gains seen from the gold, materials and metals sectors.
In contrast, the Dow Jones industrial average lost 77.80 points at 18,517.23, the broader S&P 500 composite index dipped 7.85 points to 2,165.17 and the Nasdaq composite gave up 16.03 points at 5,073.90.
Equities analyst Ian Riach said the markets are in the middle of the summer doldrums where volumes are low and movements are typically narrow.
Coupled with the uncertainty over Britain’s vote last month to leave the EU, traders are backing off making any big bets.
“There is a lot of uncertainty over where the global economy is heading,” said Riach, a portfolio manager at Franklin Templeton Investments.
“I think the U.K. leaving the European Union is going to have an impact on global growth. I don’t think anyone knows what that will be for a while. We’re going to have to get through the formal exit and the actual negotiations to see how trade is affected to get a clear picture. People are sitting on the sidelines right now until there is a little more transparency.”
That seems to be the same approach that ECB president Mario Draghi is taking.
Draghi said the central bank is open to adding more stimulus into the eurozone if it sees that Britain’s departure weighs on the region’s economy.
The central bank needs more time to monitor the situation before such a decision can be made, he said.
Riach noted that central banks are also in “uncharted territory” with Britain’s referendum, and like the rest of the world, were surprised by the result.
“Everybody was expecting the U.K. would remain in, and their bank plans would go on as they would. The surprise has caught everyone off guard now they have to reassess what their programs will be,” he said.
“Central banks are also trying to re-evaluate what kind of mechanism they can use to increase stimulative monetary policy.”
The Canadian dollar fell 0.18 of a U.S. cent to 76.42 cents US, as oil prices, which often guide the loonie’s value, were also lower.
The September crude contract dropped $1 at US$44.75 per barrel. August gold rose $11.70 to US$1,331 an ounce, August natural gas was up three cents at US$2.69 per mmBTU and September copper contracts were unchanged at US$2.26 a pound.
— With files from The Associated Press
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