The Toronto stock market registered a modest gain Monday, with strength coming primarily from the gold sector as investors nervous about the debt impasse in Washington bid bullion prices higher.
The S&P/TSX composite index gained 36.5 points to 12,795.15 while traders worry that the debt standoff threatens to bring the U.S. to the brink of default.
The Canadian dollar was lower amid falling prices for oil and base metals and a housing report that missed expectations, down 0.25 of a cent to 96.91 cents US.
Statistics Canada said that Canadian municipalities issued building permits worth $6.3 billion in August, down 21.2 per cent from July. Economists had expected a drop of 15 per cent.
New York indexes were firmly in negative ground as the U.S. government entered a second week of a partial shutdown as Democrats continued to resist calls from Republicans to link funding to changes in the country’s three-year-old health-care law and spending cuts.
Now it’s becoming clear that the Republicans intend to extend that linkage to raising the government’s debt limit, which will be reached on Oct. 17.
The Dow Jones industrials fell 83.39 points to 14,989.19, the Nasdaq was down 13.78 points to 3,793.98 while the S&P 500 index dropped 7.66 points to 1,682.84.
“Markets are getting more and more on edge after comments over the weekend from House Speaker (John) Boehner,” observed BMO Capital Markets senior economist Robert Kavcic.
Democrats insist that Republicans could easily reopen the government if Boehner simply allowed a vote on the emergency spending bill.
But Boehner calls that a non-starter, saying in a Sunday television interview that “the votes are not in the House to pass a clean debt limit, and the president is risking default by not having a conversation with us.”
Meanwhile, traders also worry about the economic damage caused by the government shutdown.
BMO’s Kavcic notes that his firm “revised down our Q4 U.S. growth call to 2.5 per cent from three as a result of an assumed three-week partial government shutdown.”
BMO has also cut growth through the first three quarters of 2014 by about a tenth of a percentage point each, “reflecting the negative impact we’ll probably see on consumer and business confidence from this political stalemate.”
The gold sector was the leading TSX advancer, up 1.7 per cent as investors looking for safety pushed December bullion ahead $14.20 to US$1,324.10 an ounce. Barrick Gold Corp. (TSX:ABX) gained 22 cents to C$18.77.
The tech sector was also supportive and shares in BlackBerry (TSX:BB) (Nasdaq:BBRY) were up 40 cents or five per cent to $8.28 on the TSX. Reuters reported Friday that the smartphone maker is in talks with Cisco Systems, Google and SAP about selling them all or parts of itself.
The report came almost two weeks after BlackBerry’s biggest shareholder, Fairfax Financial Holdings, offered to take the company private in a deal worth about $4.7 billion.
Elsewhere in the sector, CGI Group (TSX:GIB.A) gained 36 cents to $37.
Worries about the economic fallout of the shutdown and reaching the debt ceiling pushed December copper three cents lower to US$3.27 a pound. The base metals sector lost 0.5 per cent and Lundin Mining (TSX:LUN) shed four cents to C$4.50.
The energy sector was slightly lower while the November contract on the New York Mercantile Exchange fell $1.70 to US$102.14 a barrel
Investors also looked ahead to the start of the third-quarter earnings season in the U.S. this week. Dow components JPMorgan Chase and Wells Fargo report on Friday.
European bourses also lost ground as London’s FTSE 100 index shed 0.55 per cent, Frankfurt’s DAX lost 0.5 per cent and the Paris CAC 40 lost 0.08 per cent.
Earlier in Asia, U.S. debt worries pushed Japan’s Nikkei index, the Asian heavyweight, down 1.2 per cent, Hong Kong’s Hang Seng index dipped 0.7 per cent and trading was nearly flat on South Korea’s Kospi, which fell 0.1 per cent.
Australia’s S&P/ASX 200 fell 0.9 per cent while China’s markets were closed Monday for a public holiday.