Newspaper article The Canadian Press

Dollar Drops, Toronto Stock Exchange Plunges as Oil Tumbles to below US$38

Newspaper article The Canadian Press

Dollar Drops, Toronto Stock Exchange Plunges as Oil Tumbles to below US$38

Article excerpt

Dollar drops, TSX plunges as oil tumbles

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TORONTO - Plunging oil prices dragged the Toronto stock market down Monday by more than 300 points -- about 2.4 per cent -- as the Canadian dollar fell to its lowest levels in more than a decade.

The oil-sensitive loonie dropped nearly 0.8 of a cent from Friday's close to end the day at an even 74 cents U.S. That's the lowest the Canadian dollar has been against the greenback since June 2004.

The price of oil dropped $2.32 to settle at US$37.65 a barrel, a level not seen since the 2008 financial crisis roiled world markets.

The Organization of Petroleum Exporting Countries said Friday it would maintain current production levels for the next six months even as a worldwide supply glut shows no signs of easing.

Oil has dropped from a high above US$110 in July 2014 as OPEC has pumped up supply while demand from big consumers such as China has sagged.

Craig Fehr, Canadian market strategist at Edward Jones in St. Louis, said cheap oil will be a double-edged sword for Canada.

"Obviously, consumers in Canada benefit from lower gasoline prices," he said.

"But given the slow growing economy and the fact that oil prices has squashed any investment in the energy industry, and given how prominent that industry is for the Canadian economy, that's really slowed down growth."

In the U.S., cheap oil has been a boon because consumer spending is a larger share of GDP and cheaper gas tends to boost what people spend elsewhere, he said.

"Across the board you're seeing much more of a benefit to the U. …

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