Non-resource sectors push TSX up modestly, oil closes below US$60 a barrel

TORONTO – The Toronto stock market rebounded to a modest advance Thursday as investors picked over some stocks, mainly in the non-resource sectors, that were indiscriminately sold off in a string of huge declines this week that sent the TSX into correction territory.

The S&P/TSX composite index closed up 52.17 points at 13,905.12 after a 343-point plunge Wednesday that left the TSX down 12 per cent from its mid-summer highs. A drop of 10 per cent or more from recent highs is considered a correction.

Energy stocks have been the biggest casualty of the rout on the TSX as oil prices have fallen about 40 per cent since summer. The sharp decline has been sparked by lower demand prospects and an overabundance of crude oil, thanks in large part to surging shale production in the U.S. and a refusal by OPEC to cut production to support prices.

But the sell-off has also involved non-resource sectors as investors try to gauge the extent of damage that could be caused to the Canadian economy by the sharp fall in oil prices.

“(The U.S. and Canadian) economies seem to be chugging along and, outside of the negativity on oil, there really doesn’t seem to be any other negative data prints,” said Kevin Headland, director of the portfolio advisory group at Manulife Asset Management.

“So the fact that other sectors have been selling off along with energy names really didn’t make much sense. And a low oil price can be positive for many, many other sectors, especially when you look at retail spending and input costs to manufacturing.”

Positive TSX sectors included industrials, ahead 0.65 per cent, telcos up 2.25 per cent and consumer discretionaries, which gained 1.3 per cent.

The Canadian dollar fell 0.36 of a cent to a 5 1/2 year low of 86.75 cents US.

A solid U.S. retail sales report for November also helped push markets higher.

New York’s Dow Jones industrials gained 63.19 points to 17,596.34. The Nasdaq rose 24.13 points to 4,708.16 and the S&P 500 index was 9.19 points higher at 2,035.33.

U.S. retail sales perked up in November with the start of the holiday shopping season, rising 0.7 per cent, led by online buying and purchases of autos, clothing and electronics.

Crude oil prices closed at a fresh, five-year low under US$60 a barrel.

The January crude contract on the New York Mercantile Exchange fell 99 cents to US$59.95 a barrel, adding to a loss of almost $3 racked up Wednesday after OPEC cut its forecast for global demand for the cartel’s oil.

The much-battered energy sector retreated another 0.31 per cent and now is down about 30 per cent year to date in a sell-off that has lumped high-quality, low-cost producers with companies that are more vulnerable to low oil prices because of higher debt and production costs.

Many energy companies have been reacting to sharply lower oil prices by cutting capital spending estimates. Cenovus Energy (TSX:CVE) joined that group Thursday as the company announced it was cutting 2015 capital spending to between $2.5 billion and $2.7 billion, down about 15 per cent from 2014 levels. Its shares slipped 30 cents to $20.80.

The gold sector shed 1.28 per cent with February bullion down $3.80 to US$1,225.60 an ounce.

The base metals sector fell 1.65 per cent even as March copper edged up three cents to US$2.92 a pound.