TSX, New York markets extend rally for fourth straight day amid oil drop

TORONTO – Traders in Toronto and New York shied away from making any big moves Wednesday amid declining oil prices, yet most indices were still able to extend gains for a fourth straight day — with the Dow Jones and S&P 500 again breaking through new ground at the close.

The Toronto Stock Exchange’s S&P/TSX composite index climbed by a marginal 16.13 points to 14,493.80, lifted by rising gold and materials stocks.

It was the same sentiment in the U.S. where stock markets were mainly flat as the Dow Jones industrial average advanced 24.45 points at 18,372.12, while the broader S&P 500 composite index saw an uptick of 0.29 to 2,152.43. The tech-heavy Nasdaq composite was the lone decliner, down 17.09 points to 5,005.73.

The last few days have seen North American traders take the lead from climbing oil prices, which have been mostly positive in the last few sessions. Then on Wednesday, the August crude contract lost $2.05 at US$44.75 per barrel.

“It makes sense. The markets had a nice run-up in the last little while and investors want to take a little off the table or not just be as enthusiastic to buy,” said Allan Small, a senior adviser at Holliswealth.

The lower crude price was not enough to put downward pressure on the Canadian dollar, which gained 0.26 to 77.01 cents US, after the Bank of Canada announced it was holding its benchmark interest rate steady while revising its economic growth forecast.

The central bank said the impact from Britain’s decision to leave the European Union could lower Canada’s gross domestic product by 0.1 per cent over the next two and a half years, while the effects of the Alberta wildfire in May also trimmed 1.1 percentage points from second-quarter growth and forced the economy to contract by one per cent.

It now projects the economy will grow this year to 1.3 per cent from its April estimate of 1.7 per cent.

Small called the announcement was “status quo,” saying it did very little to sway the loonie and barely had any effect on the Toronto stock market.

“Today’s meeting of the Bank of Canada is definitely not one that will go down as market moving, dollar moving or interest moving or anything moving,” he said. “It’s kind of a non-event unfortunately, or fortunately, depending on how you look at it.”

Even so, he projects the Canadian dollar to fall to the 72 to 74 cents US range over the next few months as traders await to see if the U.S. Federal Reserve will, in fact, hike interest rates at least once this year. Such a move will strengthen the greenback and put pressure on the loonie.

Earnings season, which kicked off this week in the U.S., is also expected to inject more volatility into stock markets.

Meanwhile, August natural gas was unchanged at US$2.74 per mmBTU, August gold jumped $8.30 to US$1,343.60 an ounce and September copper contracts rose three cents to US$2.24 a pound.

Follow @LindaNguyenTO on Twitter.