Oil prices fell sharply on Tuesday on oversupply concerns while a gauge of stocks across the globe was on track to rise for a seventh straight session after large overnight gains in Asia.
Canada’s main stock exchange eased from a record high hit in the previous session on Tuesday, after a drop in oil prices for the second straight day hit energy stocks.
The Dow Jones Industrial Average fell from record levels while the S&P edged lower on Tuesday as dour forecasts from retailers Home Depot Inc and Kohl’s Corp fueled worries about consumer spending as the U.S.-China trade dispute dragged on.
Traders cited the lingering uncertainty over whether the U.S. and China could agree to end a trade war than nears 1-1/2 years as a reason for stocks to drift and bond prices to go higher.
U.S. President Donald Trump said he would raise tariffs on Chinese imports if no deal is reached with Beijing to end the trade war. The next round of tariffs is due to kick in mid-December.
Oil fell after sources told Reuters that Russia is unlikely to agree to further cut its oil output at a meeting with fellow exporters next month.
Separately, Norway’s October oil production beat forecasts and the potential oversupply, combined with some worries over global demand next year, sent prices lower.
“Moreover, Russia also failed to fulfill its agreed cuts in November so far,” Commerzbank analyst Carsten Fritsch said.
U.S. crude fell 3.31 per cent to $55.16 per barrel and Brent was last at $60.84, down 2.56 per cent on the day.
In Toronto, the Toronto Stock Exchange’s S&P/TSX composite index was down 13.71 points, or 0.08 per cent, at 17,011.40.
The energy sector dropped 1.2 per cent, the most among other major sectors, as crude prices extended their decline on limited progress on the U.S.-China trade deal.
The financials sector gained 0.1 per cent, while the industrials sector fell 0.7 per cent.
Leading the index were Hexo Corp., up 15.2 per cent, Aphria Inc., up 13.3 per cent, and Cronos Group Inc., higher by 9.9 per cent.
Lagging shares were Ballard Power Systems Inc., down 10.1 per cent, OceanaGold Corp., down 6.0 per cent, and SNC-Lavalin Group Inc., lower by 5.8 per cent.
The Canadian dollar weakened to a near six-week low against its U.S. counterpart on Tuesday after a speech by a senior Bank of Canada official supported the view that the central bank is moving closer to an interest rate cut.
Canada’s financial system is in a relatively good place to weather any potential storms generated by a weakening global economy and the trade war between the United States and China, Bank of Canada Senior Deputy Governor Carolyn Wilkins said.
“The open-ended tone of Wilkins’ remarks arguably pushed the Bank slightly closer to the easing posture that’s been adopted by other key central banks in recent months,” Don Curren, a market strategist at Cambridge Global Payments, said in a note.
Chances of a Bank of Canada interest rate cut as soon as March rose to 64 per cent from less than 60 per cent before Wilkins’ speech, data from the overnight index swaps market showed.
In October, Canada’s central bank shifted to a more dovish stance as it cut its economic growth forecasts and expressed concern about global trade uncertainty.
The Canadian dollar was trading 0.4 per cent lower at 1.3264 to the greenback, or 75.39 U.S. cents. The currency touched its weakest intraday level since Oct. 11 at 1.3272.
The decline for the loonie came as thousands of workers at Canada’s largest railway went on strike for the first time in a decade, disrupting the shipping of commodities, and domestic data showed monthly declines for factory sales and home prices.
Canadian factory sales decreased by 0.2 per cent in September, hampered by partial shutdowns for maintenance at some refineries, data from Statistics Canada showed.
On Wall Street, the Dow Jones Industrial Average fell 102.37 points, or 0.37 per cent, to 27,933.85, the S&P 500 lost 1.87 points, or 0.06 per cent, to 3,120.16 and the Nasdaq Composite added 20.72 points, or 0.24 per cent, to 8,570.66.
Hopes of a trade truce earlier in the day drove European stocks to a four-year high and world stocks to their highest in nearly two years, but those gains were pared later in the session.
The pan-European STOXX 600 index lost 0.12 per cent and MSCI’s gauge of stocks across the globe gained 0.05 per cent and was on track for a seventh straight session of gains.
Emerging market stocks rose 0.41 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.62 per cent higher, while Japan’s Nikkei lost 0.53 per cent.
Long-dated U.S. Treasury yields slipped for the seventh straight day as risk appetite weakened.
Benchmark 10-year notes last rose 7/32 in price to yield 1.7843 per cent, from 1.808 per cent late on Monday.
The 30-year bond last rose 29/32 in price to yield 2.2527 per cent, from 2.293 per cent late on Monday.
The dollar was little changed against a basket of six major currencies. The dollar index rose 0.05 per cent, with the euro up 0.08 per cent to $1.1079.
The Japanese yen strengthened 0.14 per cent versus the greenback at 108.54 per dollar, while Sterling was last trading at $1.2916, down 0.28 per cent on the day.
Spot gold rose 0.08 per cent to $1,472.87 an ounce.
Copper rose 0.86 per cent to $5,880.00 a tonne.
Three-month aluminum on the London Metal Exchange lost 0.06 per cent to $1,737.00 a tonne.
Reuters