TORONTO — Canada's main stock index snapped a six-day winning streak midweek on Brexit anxiety and energy demand concerns.
Energy, technology and materials were among six losing sectors Wednesday.
Energy lost 0.4 per cent after a report of a massive U.S. oil inventory buildup last week. Higher imports drove a 15 million barrel increase in stockpiles.
"That knocked oil prices down, it knocked the Canadian dollar down and so I think that's just bringing back some fears over is oil demand really going to be as strong as some people are speculating," said Erik Bregar, head of currency strategy at the Exchange Bank of Canada.
The January crude contract was down eight cents at US$45.52 per barrel and the January natural gas contract was up 4.3 cents at US$2.44 per mmBTU.
Shares of Crescent Point Energy Corp. lost two per cent but Whitecap Resources Inc. rose 3.9 per cent after announcing a $550-million all-stock deal to buy rival TORC Oil & Gas Ltd.
"The oil market's kind of been riding high right now on ... Asian demand, but if we see oil inventories rise precipitously here in North America, that might change the demand narrative a little bit," Bregar said in an interview. "It might not sound so optimistic."
On top of that, British Prime Minister Boris Johnson travelled to Brussels in an attempt to salvage a Brexit deal ahead of Britain leaving the European common market on Dec. 31.
Failure would leave U.K. trade with Europe being subject to tariffs under terms of the World Trade Organization.
Bregar called it a pivotal moment for European trade if Johnson can once again "pull a rabbit out of his hat."
"He's done it before, but can he do it now? That's the question," he said.
Failure to reach an agreement could lead to sterling moving 100 to 200 basis points lower, with broader risk sentiment falling with it.
"I don't see why the S&P couldn't go down with it," Bregar added.
He said fear has raised the price for Brexit no-deal insurance.
"The clock is ticking and and people are hedging. They just don't want to gamble."
Uncertainty over U.S. stimulus continued with the U.S. House of Representatives passing a one-week funding bill that would avert a government shutdown and give more time to reach a deal on COVID relief.
"I think that the stock market in particular would enjoy more clarity on that front. You know, tell us you're closer to getting a deal done and odds are the markets higher."
The S&P/TSX composite index closed down 79.14 points to 17,559.86 after initially rising to hit an intraday high of 17,677.96.
In New York, the three U.S. stock markets set new highs early before moving lower in later trading.
The Dow Jones industrial average was down 105.07 points at 30,068.81. The S&P 500 index was down 29.43 points at 3,672.82, while the Nasdaq composite was down 243.82 points or nearly two per cent to 12,338.95.
The Canadian dollar traded for 78.11 cents US compared with 78.08 cents US on Tuesday.
Materials fell 1.7 per cent with Oceanagold Corp. down 4.7 per cent as gold prices dropped.
The February gold contract was down US$36.40 at US$1,838.50 an ounce and the March copper contract was up 1.45 cents at US$3.51 a pound.
The technology sector lost 2.1 per cent with Shopify Inc. and BlackBerry Ltd. decreasing six and 2.5 per cent, respectively.
The consumer discretionary sector moved higher with auto parts maker Linamar Corp. up 4.8 per cent and discount retailer Dollarama Inc. up three per cent after posting strong quarterly results.
Industrials rose even though Air Canada shares lost 4.2 per cent, but are still up 82 per cent since the end of October.
This report by The Canadian Press was first published Dec. 9, 2020.
Companies in this story: (TSX:AC, TSX:DOL, TSX:LNR, TSX:SHOP, TSX:BB, TSX:OGC, TSX:CPG, TSX:WCP, TSX:TOG, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press
