Canada's main stock market in Toronto slumped Wednesday as lower commodity prices in crude oil and gold weighed on energy and mining sectors. The Toronto Stock Exchange's benchmark Standard & Poor's/TSX Composite Index fell 103.46 points, or 0.78 percent, to 13,142.29 points, down for a second consecutive day.
Seven of the TSX index' s eight main sectors went down. Oil prices plunged as U.S. crude stockpiles increased unexpectedly. The WTI for February delivery was down 1.27 U.S. dollars to 36.6 dollars a barrel, dragging TSX's energy group to a fall of 2.48 percent. One of the leading decliners on the market was Canadian Natural Resources Ltd, which fell 2.63 percent to 30.32 Canadian dollars (about 22 U.S. dollars) a share.
Enbridge Inc fell 2 percent to 27. 50 Canadian dollars a share as the company said Tuesday it has halted operations on its Ozark pipeline due to flooding along the Mississippi River. Elsewhere in commodities, February gold also fell 8.2 U.S. dollars to settle at 1,059.80 dollars an ounce. In response, Barrick Gold Corp lost 2.8 percent to 10.20 Canadian dollars a share.
The TSX mining sector fell 2.33 percent. On the economy front, Canadian household debt is still rising but many experts still believe the finances of most Canadians remain in decent shape. Earlier this month, Statistics Canada released data that showed the amount of Canadians' household debt compared with disposable income rose to 163.7 percent in the third quarter.
It means the average household had nearly 1.64 Canadian dollars in debt for every dollar of disposable income, which was a record high. While the Bank of Canada says income growth has failed to keep up with rising mortgage credit, it argues the chances household debt becomes a serious problem remains low and is likely to fade as the economy improves.
Most debt, however, is concentrated in mortgages, particularly following the recent ascension of real-estate prices. Back to equities market, some insiders predict the Toronto stock market to outpace the S&P 500 in 2016. Brian Belski, chief investment strategist at BMO Capital Markets, said the fundamental success of the Canadian equity market will ultimately be tied to the U.S., as he anticipated Canada will become more correlated with the U.S. domestic economy.
"Given increased concerns surrounding emerging markets and a global recession, Canada has underperformed significantly in recent months," Belski said. "As such, we believe the recovery we expected in the fourth quarter has only been delayed and is one of the main reasons we believe Canada will be a surprise outperformer in 2016." On the currency front, the Canadian dollar was traded lower at 0.7202 U.S. dollar, compared to Tuesday's closing at 0.7234 U.S. dollar.
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