TORONTO (Reuters) - Canada’s main stock index slipped on Monday as most energy companies fell on oil’s downward march, with the retreat muted by gains for some of the country’s biggest banks and its main railways.
The tumbling price of crude, its value almost halved since June, has stung Canada’s large energy sector, but could ultimately help boost the broader economy as consumers and businesses save money at the pump that can be spent elsewhere.
“In the long haul, it probably puts us on a higher trajectory because there will be a boost of discretionary income that can go into spending and consumption,” said Rick Hutcheon, president and chief operating officer at RKH Investments.
Oil and gas stocks have fallen sharply in recent weeks, but most ticked higher last week after one among them, Talisman Energy Inc, was acquired by oil major Repsol.
“I think the energy stocks are higher than where they probably should be,” said Norman Levine, managing director at Portfolio Management Corp. “Last week as soon as the bid for Talisman was announced, they all jumped up as though they were all going to get taken over.”
Crude fell on Monday as Saudi Arabia made clear it would not limit its production in order to prod prices higher. [O/R]
Canadian Natural Resources was off 1.6 percent at C$36.04 and Encana Corp fell 4.2 percent to C$15.72.
Gold miners were also down as bullion fell, with Goldcorp Inc off 5.2 percent at C$20.19 and Barrick Gold Corp down 4.5 percent at C$12.02. [GOL/]
The Toronto Stock Exchange’s S&P/TSX composite index ended down 35.88 points, or 0.25 percent, at 14,432.38.
An exception to the energy decline, Suncor Energy Inc, added 2.2 percent to C$36.88.
Toronto-Dominion Bank rose 0.8 percent to C$54.44 and Canadian Imperial Bank of Commerce added 1.7 percent to C$100.76.
The railways also gained, with Canadian National Railway Co up 1.6 percent at C$78.66 and Canadian Pacific Railway Ltd adding 1.4 percent to C$223.
Levine said life insurance companies will likely do better than banks in a rising interest rate environment, while telecom stocks could also win favor as investors turn more defensive after the oil price rout.
“The Canadian economy will not be as strong as the U.S. economy, and not as strong as it was going to be before because of the hit to commodities,” he said.
Additional reporting by Allison Martell; Editing by Chizu Nomiyama, W Simon and Gunna Dickson