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TSX stumbles with oil, gold price drop

Published: March 3, 2012 | 9:18 am
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Canada’s benchmark stock index closed the week with a drop of 0.6%, just its second weekly decline of the year, falling in tandem with oil and gold prices.

The S&P/TSX composite index finished Friday at 12,643.82, a loss of 79.64 points, or 0.63% on the day. Five of the 10 subindexes declined, led by materials, down 1.30%, and energy, which dropped 1.03%.

The price of crude oil fell US$2.14 to US$106.70 a barrel on Friday after U.S. President Barack Obama appeared, in an interview with Atlantic magazine, to rule out a pre-emptive attack on Iran, easing fears of a loss of oil supply from that country, and Saudi Arabia denied reports of a pipeline explosion there. Gold fell US$12.40 to US$1,709.80 an ounce, bringing its loss for the full week to US$66.60, its biggest weekly loss since December. A strengthening U.S. dollar, and signs the global economy as a whole might be improving, reduced gold’s value as a safe-haven investment.

“There were few major Canadian data releases for markets to digest this week.

This, combined with little headline news abroad, resulted in a fairly flat weekly performance for the S&P/TSX composite index, most commodities and the loonie,” economists from TD Economics wrote in a note to investors, adding that Statistics Canada reported on Friday the economy posted 1.8% annualized growth in the fourth quarter, with domestic demand, consumer spending and business investing driving the gains. “As the week progressed, economists were starting to take note of the positive global economic developments abroad to assess whether the recovery had once again regained its footing. With the acknowledgment that downside risks are still very much present, we are reminded that while the sun wants to peek out from behind the economic storm clouds, there are simply a lot of clouds in its way.”

The Canadian dollar closed at US$1.0115 on Friday, a drop of 28 basis points from its high of US$1.0143 for the week, rallying along with the price of crude oil.

In the U.S., markets swung between gains and losses, taking into account a weakening euro and an unexpected decline in German retail sales, as well as a sense that markets had rallied too quickly.

“There’s a whole too far, too fast thing,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, told Bloomberg. “We don’t think that means it’s going to have a huge pullback, but a consolidation would be a relief.”

The Dow Jones industrial average closed the day with a drop of 2.73 points, or 0.02%, to 12,977.57, while the Nasdaq fell 12.78 points, or 0.43%, to 2,976.19.

Canada’s junior Venture exchange dropped 9.53 points, or 0.56%, to 1,678.90.


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