North American stock markets were lower Wednesday, as the indexes continued to retreat from the near-record levels hit in the last few sessions.
The S&P/TSX composite index pulled back 43.52 points to 14,860.86. The Canadian dollar gained 0.31 of a cent to 92.02 cents (U.S.).
Some had predicted that the Toronto market would soon hit its record-close of 15,073, set in June 18, 2008, just before the recession brought stock values down. But that may not be the case as the TSX searches for direction with little economic data or earnings news in the near future.
In the U.S., the Dow Jones industrials dropped 95.10 points to 16,850.82, the Nasdaq fell 4.34 points to 4,333.66, while the S&P 500 dipped 6.95 points to 1,943.84.
The World Bank has said it plans to cut its 2014 growth forecast to 2.8 per cent from 3.2 per cent, citing a bitter American winter and the political crisis in Ukraine. However, recent data such as solid U.S. hiring and stronger Chinese exports in May suggest prospects for growth in the second half of the year aren’t all pessimistic.
On the commodity markets the July crude contract on the New York Mercantile Exchange gained 34 cents to $104.69 (U.S.) a barrel, ahead of a meeting by the Organization for Petroleum Exporting Countries (OPEC). The group, which is meeting in Vienna, is expected to keep its output target of 30 million barrels a day unchanged.
Energy markets were also affected by Al Qaeda-inspired militants who overran much of the Iraqi city of Mosul on Tuesday. Mosul is in an area that is usually a major gateway for Iraqi oil.
August bullion climbed $1.70 to $1,261.80 an ounce as the TSX gold sector led advancers with a 1.15 per cent jump. July copper was unchanged at $3.05 a pound, with the TSX metals and mining sector fading by 0.24 per cent.
Telecom was the leading decliner, falling by 1.26 per cent. Shares in Bell Aliant dropped 2.38 per cent, or 69 cents, to $28.31 (Canadian), while Rogers Communications stock declined by 2.15 per cent, or 96 cents, to $43.74.
Allan Small, a senior adviser at Holliswealth, said the negative news from the World Bank and Iraq, have also given North American markets an excuse to take a “bit of a pause” to come down from their near all-time highs.
“What we’re going to see going forward is more of what we’ve seen so far... sort of a grind higher,” he said. “I would be surprised to see the TSX get a significant jump.”
Small anticipates oil and gold to eventually come down, which will weigh on the commodities-heavy TSX. But because other sectors like banks and railways have been pretty stable, the effect won’t be too drastic on the exchange.
“There’s your balance,” he said. “We’ll see a lot of sideways trading doing forward.”
On the corporate front, the founder of Lululemon yoga wear wants a shakeup among board members at the company he founded. Chip Wilson voted against the re-election of two board members, saying a change is needed to increase shareholder value. Lululemon Athletics Inc. holds its annual shareholder meeting in Vancouver on Wednesday. The company reports its latest earnings results on Thursday.
Meanwhile, the Royal Bank says most of Canada will experience stronger economic growth this year and next, but only Alberta will see the kind of gains that will make a real impact on job creation. The latest quarterly report from Canada’s largest bank predicts the overall economy will expand by 2.4 per cent this year and 2.7 per cent in 2015, moderately stronger growth rates than the Bank of Canada expects.
The RBC economists say they believe the U.S. economy is kicking into gear and that – combined with the lower value of the loonie – will result in more demand for Canadian exports.
The report also said Alberta will lead the pack with a 3.7 per cent growth rate in 2014, slowing only moderately to 3.5 per cent in 2015.