Price of crude oil takes drubbing, Canadian dollar falls nearly a cent

TORONTO – Stock markets in North America tumbled, crude oil prices took a drubbing and the Canadian dollar fell nearly a full cent Tuesday, signs that uncertainty about global economic growth and the United Kingdom’s decision to leave the European Union continue to confront investors.

The August contract for oil slid US$2.39 at US$46.60 per barrel. That likely drove down the commodity-sensitive loonie, which shed 0.95 of a U.S. cent, closing at 76.83 cents US.

The Toronto Stock Exchange’s S&P/TSX composite index was down 39.30 points to 14,219.57, following a 194.33-point gain on Monday.

Following the Independence Day holiday, markets in New York reopened Tuesday on a down note. The Dow Jones industrial average fell by 108.75 points at 17,840.62, the broader S&P 500 composite index declined 14.40 points to 2,088.55 and the Nasdaq composite dropped 39.67 points to 4,822.90.

“We’re likely to continue to see this bounce around in investor sentiment between cautiousness and optimism,” said Craig Fehr, a Canadian market strategist with Edward Jones in St. Louis. “And I’d say we’re just leaning a little bit more toward the cautious side today.”

That volatility is likely to be most acute this summer, as policy-makers and officials try to navigate how Britain’s exit from the EU will be orchestrated, Fehr said. But expect that to subside a little bit as the situation becomes more clear later, he added.

Also pushing the markets down Tuesday were some recent economic reports that have weighed on investors, including suggestions the export side of China’s economy is struggling, he said.

The Commerce Department also said Tuesday that U.S. factory orders fell one per cent in May, suggesting that manufacturers south of the border have yet to fully recover from the sting of weaker economic growth worldwide.

“Global growth is not robust enough to inspire confidence every single day and it’s not weak enough to drive a tremendous amount of pessimism every single day, so we’re just getting the one-off reports on a daily basis that are bouncing sentiment around,” he said.

It’s likely the loonie will continue to face pressure from lower oil prices, as well as the possibility of a divergence between the U.S. and Canadian central banks on changes to interest rates, he said.

Elsewhere in commodities, the August contract for natural gas was down 22.3 cents at US$2.764 per mmBTU, August gold rose US$19.70 to US$1,358.70 an ounce and September copper contracts fell 3.35 cents to US$2.1835 a pound.

— With files from the Associated Press

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