Oil prices slid to two-month low on Monday and dragged the Toronto stock market down with them, led by the energy sector.
Toronto’s S&P/TSX index ended 162.76 points lower at 13,790.90 in a gradual slide that extended throughout the session.
Energy stocks weakened, with the index falling 2.7%. The December contract for benchmark crude oil lost 62 cents to US$43.98 a barrel, its lowest level since late August, amid continuing concerns about oversupply in the market.
November natural gas plunged 22 cents to US$2.06 per mmBtu while gold rose $3.40 to US$1,166.20 an ounce.
Meanwhile, the Canadian dollar was up 0.07 of a U.S. cent at 75.97 cents US as the greenback weakened in advance of this week’s two-day policy rate meeting of the Federal Reserve, which gets underway Tuesday.
There has been increased speculation recently that the U.S. central bank is much less likely to raises rates this year than previously believed as a result of continued weakness in the global economic recovery, especially the ongoing slowdown in China.
Earnings season is also getting underway in Canada with Tim Hortons’ owner Restaurant Brands International Inc. (TSX:QSR) and Canadian National Railway Co. (TSX:CN) scheduled to issue results on Tuesday.
“Corporate management in both Canada and the United States are still underpromising and overdelivering,” said Brian Belski, chief investment strategist at BMO Nesbitt Burns.
“We still think both countries will be recovering in terms of growth for the next several quarters.”
In New York, markets were mostly negative with the Dow Jones industrial average down 23.65 points at 17,623.05, while the broader S&P 500 gave back 3.97 points to 2,071.18 and the Nasdaq index edged 2.84 points higher to 5,034.70.
In corporate news, Valeant Pharmaceuticals (TSX:VRX) says it is asking U.S. securities regulators to investigate Citron Research, the short-seller research firm whose scathing report last week caused the Quebec-based drugmaker’s stock to tumble.
Chief executive Michael Pearson told analysts on a conference call Monday that the main reason for Valeant’s recent problems is that it’s the victim of false allegations by outsiders who want to manipulate the market for their own profit. On the TSX, Valeant was down another 4.8%, falling $7.35 to $145.34 per share, in afternoon trading.
“The good news in respect to the Valeant pullback is that it provides an opportunity to redistribute money into areas that we think have bottomed, like energy, but more importantly things we think are dramatically underowned that can, will and should lead the Canadian market higher,” said Belski.
“We think that’s namely the banks.”
South of the border, Duke Energy, the biggest electric company in the U.S., said it will buy Piedmont Natural Gas for about $4.9 billion, or $60 per share. The deal will give Duke about a million new customers in the Carolinas and Tennessee. Duke shares were down $1.49 or two per cent at US$72.25.