TORONTO – North American stock markets turned lower Wednesday, a day before a historic vote that could see Britain exit the European Union, a move that many see as having consequences for the European and global economies.
In Toronto, the S&P/TSX composite index faded 8.51 points to 14,003.81, with the energy sector leading decliners as oil and natural gas prices racked up losses.
A report that U.S. energy stockpiles decreased by a smaller amount than analysts expected put pressure on the August contract for benchmark North American crude oil, sending it down 72 cents to US$49.13 a barrel.
The oil-sensitive Canadian dollar also took a hit, down 0.17 of a U.S. cent at 77.89 cents US.
Elsewhere in commodities, July natural gas plunged nine cents to US$2.68 per mmBtu, while August gold lost $2.50 to US$1,270 a troy ounce and July copper added two cents to US$2.14 a pound.
New York markets also fell ahead of the British vote, with the Dow Jones industrials giving back 48.90 points to 17,780.83, while the broader S&P 500 lost 3.45 points to 2,085.45. The Nasdaq composite dipped 10.44 points to 4,833.32.
Todd Mattina, chief economist and strategist with Mackenzie Investments, said investors are concerned over the outcome of the referendum that could see Britain exit the economic union, commonly referred to as Brexit, because it still remains a “very close race.”
“There’s a striking gap between what bookmaker odds suggests and what public opinion polls are saying,” he said.
“On balance, the odds are likely that the U.K. will vote to remain with the EU, but there is still a significant number of undecided so the vote can turn out to surprise markets.”
Mattina said once the uncertainty over Brexit concludes, traders will likely return their attention to anticipating the U.S. Federal Reserve’s plans for interest rates.
On Wednesday, Fed chair Janet Yellen said she was “very hopeful” that U.S. job growth will rebound in the coming months following disappointing figures in April and May, a major factor in the Fed’s decision whether to raise rates.
Yellen reiterated in a second day of testimony before Congress that the central bank will continue to stay cautious in raising interest rates.
In other economic news, the International Monetary Fund downgraded its forecast for the U.S. economy this year and said America should raise the minimum wage to help the poor, offer paid maternity leave to encourage more women to work and overhaul the corporate tax system to boost productivity.
The IMF thinks the U.S. economy will grow 2.2 per cent this year, down from its previous forecast of 2.4 per cent. The economy grew 2.4 per cent in 2015.
— With files from The Associated Press
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