A sharp drop in the price of oil weighed on Canada’s main stock index Monday as American markets were mixed following the U.S. Senate’s passage of a tax bill.
The S&P/TSX composite index fell 69.94 points to 15,969.03, with the energy sector leading decliners.
“When you compare the domestic market to what we’re seeing on a more global basis, it’s another example of much of what we’ve seen in 2017 so far…. The domestic market is being held back by the composition and the higher weight to natural resource sectors,” said Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis.
“The drag from the oil today is kind of negating what we’re seeing as a rather positive day in other global markets.”
The January crude contract tumbled US89¢ to US$57.47 per barrel.
Fehr pegged falling oil prices to a retracement of some of the strong gains seen recently in the run-up to an OPEC meeting last week where members of the allied oil-producing nations, including non-members such as Russia, agreed to extend crude output cuts until the end of next year.
“I think that’s being met, particularly today, with the expectation that we’re likely to continue to see production increases in other areas, particularly the United States,” he said. “And so I think that’s dampening some of the enthusiasm that pushed oil prices higher more recently.”
Overseas, European markets rallied after the chief of the European Union said he was encouraged by last-minute progress in talks for the United Kingdom to leave the group. France’s CAC 40 jumped 1.4% and Germany’s DAX surged 1.5%. The FTSE 100 in London rose 0.5%.
South of the border, U.S. stock indices struggled to hang onto gains Monday afternoon on expectations that lower taxes will help corporate profits pile up even higher. Congress moved closer to overhauling the U.S. tax system over the weekend, after the Senate narrowly approved its package of cuts.
In New York, the Dow Jones industrial average advanced 58.46 points to 24,290.05, enough to push it further into record territory, but a far cry from its early morning gains which saw it trading more than 226 points higher.
The S&P 500 index dipped 2.78 points to 2,639.44 after being positive earlier in the trading session. The Nasdaq composite index was down 72.22 points to 6,775.37.
“It’s another tax-trade day and you’re seeing that show up in performance,” said Fehr. “And when you think about some of the sectors that probably benefit the most from this potential tax legislation, we’re seeing that show up in areas like financials and it’s coming at the expense of areas like technology.”
In currency trading, the Canadian dollar closed at an average trading price of US78.77¢, up 0.21 of a U.S. cent.
Elsewhere in commodities, the January natural gas contract was down US8¢ to US$2.99 per mmBTU, the February gold contract lost US$4.60 to US$1,277.70 an ounce and the March copper contract was unchanged at US$3.09 a pound.
With files from The Associated Press