Talisman energy fields offshore Malaysia.
An early attempt at a rally fizzled on the Toronto stock market Monday as another sharp drop in oil prices pushed energy companies lower and eroded gains in non-resource sectors.
The TSX started the session with a triple digit gain as investors picked over some stocks that were badly beaten up last week during the course of a selloff sparked by plunging oil prices. But the advance fizzled, leaving the Toronto market up 63.62 points, or 0.46 per cent, to 13,794.67.
The Canadian dollar fell 0.33 of a cent to a fresh, 5 1/2 year low of 86.09 cents (U.S.).
U.S. indexes also moved into the negative column with the Dow Jones industrials down 77.42 points to 17,203.41, the Nasdaq moved 35.59 points lower to 4,618.01 while the S&P 500 index gave back 9.61 points to 1,992.72.
Energy companies have been the most visible targets of an equity market selloff that gained momentum in late November after the OPEC cartel rejected calls to cut production in order to support prices that have dropped more than 40 per cent since midsummer amid a huge supply and demand imbalance. The energy sector, which had been up 20 per cent year to date in midsummer, is now down 30 per cent.
But other sectors have been hard hit as investors try to gauge the effect of sharply lower oil prices on the Canadian economy.
The news hasn't been all bad; the consumer staples sector, for example, is up 35 per cent this year, partly because cheaper gasoline prices are leaving people with more discretionary income. And the consumer discretionary group, which includes auto parts manufacturers, has benefitted from a falling Canadian dollar and is ahead 20 per cent .
"The consumer segments are going to be obvious beneficiaries over time from the boost the consumer wallet gets from this," said Craig Fehr, Canadian Markets Specialist at Edward Jones in St. Louis.
"There will be other sectors that perhaps will benefit when you think about input costs, the industrials to a degree (such as airlines). All will benefit from lower energy costs as it relates to their bottom lines."
Meanwhile, early price support for crude also also faded during the morning and January crude lost $1.03 to $56.78 (U.S.) a barrel after falling 12 per cent last week alone and the energy sector fell 0.66 per cent.
Talisman Energy was a major advancer with its stock ahead almost 18 per cent to $5.91(Canadian) after it confirmed Monday it was engaged in discussions with Spanish oil major Repsol regarding a potential transaction. Repsol said separately that its board will discuss a potential bid for 100 per cent of Talisman.
Commodities were also pressured by a U.S. dollar which strengthened ahead of the Federal Reserve's interest rate announcement on Wednesday. Rates are expected to start rising some time later in 2015 but the timing is unclear. The Fed has committed to keeping short term rates ultra-low "for a considerable period of time" for several years and markets will look to see if there is any change in that wording.
March copper dipped three cents to $2.91 a pound and the base metals component rose 0.2 per cent.
The non-resource sectors were the favourites Monday morning with consumer staples up 1.4 per cent, while the consumer discretionary group climbed 0.8 per cent and telecoms rose 0.6 per cent.
The gold sector fell 0.65 per cent with February gold down $7.80 to $1,210 an ounce.