Loonie falls half a cent amid declining crude; stock markets look for direction

TORONTO – North American traders avoided moving stock markets in any solid direction Tuesday, amid a dry spell of economic data and an anticipated meeting of the European Central Bank to be held later this week.

On the Toronto Stock Exchange, the S&P/TSX composite index was barely changed, down 7.79 points at 14,524.61.

In New York, the Dow Jones industrial average gained 25.96 points to climb to another record close at 18,559.01. The broader S&P 500 composite index declined a marginal 3.11 points at 2,163.78 and the Nasdaq composite faded 19.41 points at 5,036.37.

Equity markets had enjoyed a rally in recent weeks which helped send the Dow and S&P 500 to new heights. The rapid rise is in sharp contrast to this week, where traders have held off from making any major moves.

“The rally we’ve seen largely has been macro driven,” said Craig Jerusalim, a portfolio manager of Canadian equities at CIBC Asset Management. “For that rally to continue, we’re going to really have to see (corporate) earnings growth come through in these quarterly results.”

He notes that despite the pullback in recent days, the Toronto stock market is up 24 per cent since its January lows, while the S&P 500 is up nearly 20 per cent compared with its February lows.

“The sentiment has shifted so quickly from fear to greed and we could see that deteriorate from here,” said Jerusalim, adding that another terrorist attack, negative employment figures or a major central bank decision could easily shake global stock markets.

The European Central Bank is set to meet on Thursday, even though most economists don’t believe president Mario Draghi will be announcing any surprising policy changes. Nevertheless, it will be a well-watched meeting to see how the central bank reacts to last month’s Brexit vote, as the impact of Britain’s decision to leave the European Union still remains unclear.

Meanwhile in corporate news, shares in tech firm BlackBerry (TSX:BB) fell three cents, or 0.34 per cent, to $8.68 amid news that the Waterloo, Ont., company has won a multimillion-dollar contract to provide secure crisis software to the U.S. Capitol complex.

In currencies, the loonie lost 0.54 of a U.S. cent, closing at 76.76 cents US, as oil prices dropped.

The more heavily-traded September crude contract declined 49 cents at US$45.45 per barrel, while the August contract dipped 59 cents to US$45.65 a barrel.

August natural gas was up a penny at US$2.73 per mmBTU, while the August gold contract rose $3 to US$1,332.30 an ounce and the September copper contract rose three cents to US$2.26 a pound.

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