TORONTO (Reuters) - Canada’s main stock index eased on Monday as energy companies fell on lower oil prices, with investors also cautious on China’s latest interest rate cut and prospects for a resolution of Greece’s financial woes.
Oil and gas shares were down 1 percent as crude prices came under pressure from signs of a rejuvenation in already bloated U.S. shale supplies. [O/R]
Canada is a major energy producer and weakness in the sector can have a big impact on the overall health of the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE, which closed down 17.38 points, or 0.11 percent, at 15,152.64.
A lower price at the pump could give Canadians more spending power, although the economy still faces weak wage growth, high debt levels and a softening housing market, one strategist said.
“The punitive effect of oil prices on the energy industry are the beneficial effects that accrue to the consumer,” said Craig Fehr, Canada strategist at Edward Jones in St. Louis, Missouri.
Crescent Point Energy Corp (CPG.TO) was among the most influential declining issues, falling 3.4 percent to C$29.88. Pembina Pipeline Corp (PPL.TO), which fell 1.6 percent to C$41.38, was also a key loser.
Greece made a crucial 750 million euro payment to the International Monetary Fund a day early but major hurdles remain, while China cut interest rates for the third time in six months to stoke a sputtering economy heading for its worst year in a quarter of a century.
Fehr said investors should expect more volatility but that the Canadian index should move higher this year, in part helped by recovery in the energy and materials sectors.
“I think we can trend higher but I think we’re likely due for mid-single digit returns this year” excluding dividends, he said.
Of the index’s 10 main groups, half were in negative territory. Declining issues outnumbered advancing ones on the TSX by 157 to 86, for a 1.83-to-1 ratio on the downside.
Additional reporting by Solarina Ho; Editing by Peter Galloway and Dan Grebler