Traders work on the floor of the New York Stock Exchange (NYSE) on September 25, 2014 in New York City.Spencer Platt/Getty Images
The Toronto stock market was lower Friday as oil hovered around the $58 (U.S.) a barrel level following another indication of weakness in the world's second-biggest economy and a revised forecast from the International Energy Agency.
The S&P/TSX composite index was down 78.66 points, or 0.57 per cent, to 13,826. By 2:00 pm ET, the January West Texas Intermediate futures contract in New York was $58.16 after hitting a five-year low of $57.71 a few hours earlier.
The IEA cut its forecast for global oil demand growth by 230,000 barrels per day, to 900,000 barrels a day, citing lower expectations from oil-exporting countries. The January crude contract in New York moved down $1.78 to a fresh, five year low of US$58.17 a barrel with analysts unable to say where the price bottom will be hit.
"The (oil) market is in freefall essentially because there is no clarity on when supply will be cut," said Kash Pashootan, portfolio manager at First Avenue Advisory in Ottawa, a Raymond James company.
The Canadian dollar slipped 0.05 of a cent to 86.7 cents US.
U.S. indexes were also lower after data showed that growth in China's factory output declined further in November as industrial production rose by 7.2 per cent over a year earlier. That was down from October's 7.7 per cent growth and September's eight per cent rate.
China's economic growth slowed last quarter to a five-year low of 7.3 per cent, below the official full-year target of 7.5 per cent.
The Dow Jones industrials fell 211 points to 17,385, the Nasdaq gave back 20 points to 4,687 while the S&P 500 index was down 19 points to 2,015.
The Toronto stock market is in for steep losses this week — as of mid-week the TSX had plunged 12 per cent from summertime highs and moved into correction territory, defined as a slide of at least 10 per cent from recent levels. The Toronto market's main index is only about 150 points away from where it started the year.
The drop in oil prices pushed the TSX energy sector down 0.3 per cent.
The energy sector has been a huge weight on the TSX, plunging almost 30 per cent year to date, reflecting a drop in oil prices of about 45 per cent since mid-year amid lower demand and far higher supplies, a situation made all the worse by OPEC's refusal to cut production.
Talisman Energy (TSX:TLM) was a big positive for the TSX energy sector Friday. Its shares rocketed 33 per cent to $5.68 after The Financial Times reported that Spanish oil group Repsol is in talks to acquire Talisman in a deal that could value the Calgary company's equity at up to US$8 billion. It says the price being negotiated is in a range between $6 and $8 per share, which would represent a premium of up to 117 per cent to Talisman's share price Thursday.
But, like other energy companies, Talisman's share price has been hit hard by falling oil and is down sharply from its 52-week high of $13. And analysts think other companies will also become ripe takeover targets while the market sorts out where oil prices should be.
"We're getting to a stage now where we're going to see more in the way of consolidation and mergers because for companies looking at buying another company, everything is on sale," added Pashootan.
Elsewhere on the TSX, the base metals sector was down 1.9 per cent as March copper was up a penny at US$2.93 a pound.
The gold sector was down 0.5 per cent with February gold off a dime to US$1,225.50 an ounce.
All TSX sectors were lower with financials down one per cent.