TSX closes up 7.4% on year, Dow up 7.5%

Written By Unknown on Kamis, 01 Januari 2015 | 22.40

The Toronto stock market wrapped up the year with a 7.4 per cent gain, almost equivalent to the Dow Jones industrial index, which is up 7.5 per cent in 2014.

These gains follow on a stellar 2013, when the TSX rose nine per cent and the Dow was up 26 per cent.

The TSX index is closing the year down slightly in light trading, dipping 10 points to 14,629.50 on Wednesday afternoon.

Oil and metal prices were in decline after the HSBC's monthly purchasing managers' index showed a decline in orders for Chinese manufacturers. The index fell below the 50-point threshold to 49.6, meaning that orders were contracting.

Declining demand for raw materials from China has hurt Canadian exports this year and helped knock commodity prices lower.

Loonie takes a tumble

The Canadian dollar closed at 86.08 US, a drop of 7.8 cents on the year.

The loonie has been pressured by low oil prices and a strengthening American dollar, which bounced upward after the U.S. Federal Reserve ended its quantitative easing program.

Oil continued its slide today, hitting energy stocks already beaten down by months of uncertainty over oil prices.

The West Texas Intermediate contract was trading in New York at $53.68 US a barrel, down 44 cents and a decline of 45 per cent on the year. Brent Crude was down 57 cents at $57.33 a barrel, a fresh 5½-year low.

Brent's retreat is the biggest since 2008, when prices fell 51 per cent in response to a demand slump after the financial crisis.

At its highest point this year – on Sept. 3, 2014 – the TSX index closed at 15685.13, a gain of 15 per cent.

But the fall in oil prices since September has dragged down Toronto stocks. The oversupply in global oil reserves as U.S. shale producers stepped up production became clear to traders this fall and the oil price sank from the $90 range in September to the $70 range six weeks later.

Then on Nov. 27, OPEC met in Vienna and decided not to reduce production in the face of falling prices. Traders are still searching for a bottom as oil heads for $50 range.

The Toronto energy sector was the year's worst performer, losing more than 20 per cent in 2014. Bright spots include financials, up nine per cent.

The best performers were those sectors benefiting from much lower gasoline prices and a Canadian dollar depressed by falling oil prices. These include the consumer discretionary sector, up 26 per cent, and consumer staples, which has run ahead 45 per cent

Big gains for U.S. stocks

The U.S. economy is less susceptible to oil price shock as the country is a net oil importer. Falling oil prices have helped speed up the recovery of the manufacturing sector, cut costs for the transportation sector and empowered consumers to spend more.

The improved economy has helped U.S. stocks to a solid gain. The Dow is up 7.5 per cent on the year, the broader-based S&P 500 index was up 11.5 per cent and the Nasdaq is up 17.9 per cent.

On Wednesday, a late drop in interest pushed the Dow down 160 points to 17,823.07, the S&P fell 21 points to 2058.90 and the Nasdaq declined by 41 points to 4736.05.

The Dow and S&P 500 index hit their highs for the year within the past week and are trading near record levels. 

Among the big winners on U.S. exchanges were utilities stocks, which rose 26 per cent as investors sought them out as low-volatility investments that pay regular dividends.

Health-care stocks rose by 25 per cent and information technology was up 19 per cent, with big wins for companies such as Electronic Arts and Alibaba. U.S. industrials and the real estate sector also did well.

The big losers were telecom stocks, down one per cent amid cutthroat competition, and energy stocks, which were down 10 per cent on the year.


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