September 11, 2015 / 11:50 AM / 4 years ago

Drop in crude oil price drags TSX down

TORONTO (Reuters) - Canada’s main stock index fell on Friday as energy shares tumbled alongside the price of oil after Goldman Sachs cut its crude forecast.

A man walks past an old Toronto Stock Exchange (TSX) sign in Toronto, June 23, 2014. REUTERS/Mark Blinch

Investors were also looking ahead to next week’s meeting of the U.S. Federal Reserve, which could prove pivotal if the central bank decides to raise interest rates for the first time in nearly a decade.

“We’re in a frustrating period,” said Michael Sprung, president at Sprung Investment Management. “Certainly there’s a lot of unknowns” both domestically and globally, he said.

The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE lost 108.50 points, or 0.8 percent, to close at 13,461.39. It was off just 0.1 percent in the holiday-shortened week.

Seven of the TSX’s 10 main groups fell, led by a 3.1 percent fall in the energy group.

The main catalyst was Goldman cutting its 2016 crude forecast due to oversupply and concerns about China’s economy. [O/R]

U.S. crude CLc1 prices were down 2.5 percent to $44.78 a barrel, while Brent crude LCOc1 lost 1.5 percent to $48.15.

Oil companies were among the biggest drags on the index, with Suncor Energy Inc (SU.TO) down 2.7 percent at C$34.08 and Canadian Natural Resources Ltd (CNQ.TO) declining 3.8 percent to C$26.51.

Sprung said deep-pocketed energy companies would likely take advantage of the industry’s slump to pick up assets cheaply, but that investors would need a long-term view to buy in.

“In the long run, this is going to be a good thing for the companies that have the wherewithal to survive this,” he said, naming Suncor as one example.

The uncertainty over whether the Fed will lift rates next week or wait until later in the year could mean greater volatility in global markets, including Canada.

“The decision that they make next week will be one of the most closely watched decisions in the last couple of years,” said Bryden Teich, associate portfolio manager at Avenue Investment Management in Toronto.

Additional reporting by Leah Schnurr in Ottawa; Editing by Jeffrey Benkoe and Grant McCool

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