Energy stocks drag TSX down as oil falls below US$80, while U.S. markets rise

TORONTO — Losses in the energy sector dragged Canada’s main stock index down Tuesday, while U.S. markets rose, led by gains on the Nasdaq. 

The S&P/TSX composite index closed down 168.35 points at 19,575.59.

In New York, the Dow Jones industrial average was up 56.74 points at 34,152.60. The S&P 500 index was up 12.40 points at 4,378.38, while the Nasdaq composite was up 121.08 points at 13,639.86.

Markets are still digesting last week’s news, said Lesley Marks, chief investment officer of equity at Mackenzie Investments.

The U.S. Federal Reserve last week announced it was holding its key overnight rate steady, though it left the door open to more rate hikes if necessary to continue cooling inflation. 

“We had a nice run in equities coming off the back of the Fed meeting last week,” said Marks.

“Interest rates have continued to fall across the yield curve,” she added. 

U.S. Treasury yields continued to ease on Tuesday, and several big tech companies helped lead the strength on Wall Street. 

But in Canada, the falling price of oil overshadowed the market. Oil fell below US$80 per barrel, and the energy index on the TSX was down 3.77 per cent. 

The slide was likely due to general concerns over the economic slowdown, said Marks. That slowdown is good news for investors worried about interest rates but bad news for oil prices, she said. 

“Oil is a commodity that has cyclical demand characteristics to it. And so any outlook … in the context of a slowing economy means that there will be less demand for oil,” she said. 

Third-quarter earnings continue to roll in on Bay and Wall Streets. Most big U.S. companies have surpassed estimates so far, but Marks said investor reaction to the earnings beats haven’t been overly positive.

“The interesting thing that we’ve been observing is when companies beat expectations, the stock doesn’t react in a material way. But when they meet expectations or miss expectations, the impact is extremely negative on share prices.”

The Canadian dollar traded for 72.67 cents US compared with 73.12 cents US on Monday.

The December crude contract was down US$3.45 at US$77.37 per barreland the December natural gas contract was down 12 cents at US$3.14 per mmBTU.

The December gold contract was down US$15.10 at US$1,973.50 an ounce and the December copper contract was down four cents at US$3.68 a pound.

— With files from The Associated Press 

This report by The Canadian Press was first published Nov. 7, 2023.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD) 

Rosa Saba, The Canadian Press