A dollar coin is pictured in North Vancouver, in April, 2014. THE CANADIAN PRESS/Jonathan Hayward

S&P/TSX composite reverses gains to close lower despite rising oil price

S&P/TSX composite reverses gains to close lower despite rising oil price

TORONTO — Canada’s main stock index gave up gains in afternoon trading on Wednesday, despite a boost from the energy and materials sectors.

Pierre Cléroux, chief economist for the Business Development Bank of Canada, said that while Wednesday’s market move wasn’t huge, he is anticipating markets will continue to swing up and down going forward.

“The U.S. election is going to be in three weeks and it brings more uncertainty to the market. Especially now that there is a perception we might change administrations — this is going to bring much more volatility to the market,” said Cléroux.

The S&P/TSX composite index closed down 55.43 points at 16,455.40, despite opening in the green.

The resource-heavy materials sector closed 1.04 per cent higher, with the S&P/TSX Global Gold Index up 1.42 per cent as companies such as Eldorado Gold and Kinross Gold Corp. notched gains. The December gold contract was up US$12.70 at US$1,907.30 an ounce and the December copper contract was up 0.6 cents US$3.05 a pound.

Energy was also slightly higher, with oil settling above $41 per barrel. The November crude contract was up 84 cents US at US $41.04 per barrel and the November natural gas contract was down 21.9 cents US at US$2.64 per mmBTU.

Cléroux said the S&P/TSX composite index could have followed U.S. markets lower after U.S. treasury secretary Steven Mnuchin said at a conference that it would be “difficult” for lawmakers to agree on an economic stimulus package before the U.S. presidential election in November.

In New York, the Dow Jones industrial average was down 165.81 points at 28,514.00, the S&P 500 index was down 23.26 points at 3,488.67, while the Nasdaq composite was down 95.17 points at 11,768.73.

“The U.S. economy is performing okay. The initial recovery is good, but not great. And I think the market feels that we need a second program to stimulate the U.S. economy, so I think they were disappointed today,” said Cléroux.

“If the U.S. economy is not performing well, it will have an impact on (Canadian) exports … we’re closely linked to the U.S.”

The Canadian dollar traded for 76.11 cents US compared with 76.14 cents US on Tuesday. Cléroux said the move was likely a result of the U.S. dollar weakening.

Major U.S. banks began reporting quarterly earnings this week, with Bank of America reporting Wednesday morning. Cléroux said he will be watching quarterly earnings reports going forward as a signal for how the economy is recovering from the COVID-19 pandemic.

“The economy is not performing very well. We’re still way far away from the situation in February and the market has been coming back very quickly —much quicker, actually, than the economy. So there’s a perception — or there’s a worry — that the market is not reflecting the reality.”

This report by The Canadian Press was first published Oct.14, 2020.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD=X)

— With files from the Associated Press

Anita Balakrishnan, The Canadian Press