North American markets were mixed Monday as violence in Iraq pushed up oil prices and traders looked ahead to the U.S. Federal Reserve’s monthly policy meeting later in the week.
The S&P/TSX composite index added 38.37 points to 15,039.98.
The Canadian dollar was up slightly at 92.11 cents (U.S.) ahead of a two-day meeting by the U.S. Federal Reserve, which will deliver an economic outlook and decide whether it will continue to dial back on its massive bond purchasing program on Wednesday. The stimulus program has long helped support equities markets.
U.S. indexes were lower as the Dow Jones industrials fell 27.80 points to 16,747.94, the Nasdaq slid 8.02 points to 4,302.63, while the S&P 500 dropped 2.27 points to 1,933.89.
Wall Street found support despite a new rate cut by the International Monetary Fund, which is forecasting that the U.S. economy will grow at a modest two per cent this year, below its previous estimate of 2.7 per cent. In a report, the IMF noted that a brutal winter and a slowing housing recovery caused the economy to shrink during the first three months of 2014. The cut in growth comes amid a similar move by the World Bank, which cut its 2014 global growth forecast to 2.8 per cent from 3.2 per cent, citing weather conditions and the political crisis in Ukraine.
Traders are looking ahead to a two-day meeting by the Fed, that begins on Tuesday. The central bank is expected to reduce its massive bond buyback program by a further $10-billion to $35-billion (U.S.) a month on signs of an improving economy. But Chris King with Morgan Meighen and Associates said that Fed chair Janet Yellen is not expected to announce any surprise moves following the end of the meeting Wednesday.
“(The Fed) doesn’t want to disrupt the steady progress that is being made,” said King, the vice-president and a portfolio manager.
“The concern is that investors and the Main Street psyche is still quite weak and the economy runs on confidence. The biggest risk would be the economy, so they have got to keep confidence in the markets sustainable.”
Meanwhile in Canada, there were more positive economic signs emerging.
The Canadian Real Estate Association says home sales for May were up 5.9 per cent compared with April and 4.8 per cent higher compared with a year ago .The national average price for a home sold in May was $416,584, up 7.1 per cent from the same month last year, pushed higher by gains in Toronto and Vancouver.
In commodities, the benchmark U.S. crude for July delivery rose four cents to $106.95 (U.S.) a barrel as the conflict in Iraq worsened following reports of a massacre by Islamic militants over the weekend, raising fears of widening instability in the country, a key energy producer. The energy sector was the leading advancer on the Toronto Stock Exchange, up by 0.64 per cent.
The northern town of Tal Afar became the latest to fall to the militants, who have already captured a vast swath of territory including Iraq’s second-largest city, Mosul. The militants, who on Sunday posted graphic photos of truckloads of Iraqi soldiers that they apparently captured and killed, have vowed to march on Baghdad.
Traders also flocked to other commodities such as gold, due to the possible volatility of stocks amid the Iraqi crisis. August bullion was up 70 cents to $1,274.80 an ounce and July copper was up two cents to $3.05 a pound.
In corporate news, Dorel Industries Inc. says it’s buying Hong-Kong-based Lerado Group, one of the largest manufacturers of infant and juvenile products in China, for $120-million. The purchase will provide Dorel with its first company-owned factories in Asia. The acquisition includes four plants, three in China and one based in Taiwan. Its shares rose 1.56 per cent, or 62 cents, to $40.79 on the TSX.Report Typo/Error