Sharp drop in price of crude oil drags down Toronto Stock Exchange

TORONTO – A sharp drop in the price of oil dragged the Toronto Stock Exchange to a lower close on Thursday after data out of the U.S. showed that crude stockpiles didn’t fall as much as investors had expected.

The Toronto Stock Exchange’s S&P/TSX composite index lost 96.60 points to 14,134.46, led by gold stocks, which declined 2.82 per cent, while energy companies slipped 1.51 per cent.

The health-care sector was one of the few bright spots on the TSX, climbing 1.62 per cent.

Meanwhile, the oil-sensitive loonie slipped 0.26 of a U.S. cent to 76.91 cents US.

“It’s definitely been quite volatile,” said Jayson Moss, a research analyst at Franklin Bissett Investment Management.

“There still is a lot of uncertainty. People are definitely concerned still with Brexit,” he added, referring to the U.K.’s vote late last month to exit the European Union.

The declines in the TSX and in the Canadian dollar came as the August crude contract fell $2.29 to US$45.14 per barrel, following a report from the Energy Information Administration in the U.S. that showed energy stockpiles remain at historically high levels.

The report said inventories shrank last week by 2.2 million barrels — less than the 2.6 million-barrel drop that analysts had predicted, according to S&P Global Platts.

The decline in energy prices came after a similar drop earlier in the week. On Tuesday, the benchmark crude price slipped $2.39.

The price of gold was also down after staging a rally in recent days that brought it to some of the highest levels it has seen recently.

The August gold contract ended the day at US$1,362.10, a decline of $5 from Wednesday’s close.

“It’s kind of flat today, but we haven’t seen gold at these levels since July 2014,” said Moss. “Gold-related equities have also moved quite a bit higher (recently).”

In New York, stock markets were mixed despite the release of positive data on the hiring front.

The Dow Jones industrial average gave back 22.74 points to 17,895.88, the broader S&P 500 composite index lost 1.83 points to 2,097.90 and the Nasdaq composite added 17.65 points at 4,876.81.

A survey south of the border by payroll processor Automatic Data Processing, or ADP, showed that hiring picked up in June after being sluggish in the previous months.

The report said employers added 172,000 jobs last month, after hiring had slowed in April and May. The estimate is based on private companies.

The U.S. government will release its own highly anticipated jobs report on Friday.

In other commodity news, August natural gas lost one cent to US$2.78 per mmBTU while September copper fell three cents to US$2.12 a pound.


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