Canadian stock market indices and loonie both take a dive

Stock markets declined around the globe on concerns about China and slumping oil prices. At close Friday, the Dow Jones dropped 390.97 points, the S&P 500 fell 41.55 and the Nasdaq slid 126.58 points.

The Toronto Stock Exchange S&P/TSX dropped 263 points or a full 2.13 percent to 12,073.46. This is the TSX's lowest level since June 2013. Over the week, the drop will be over 3 percent. The TSX decline was partly due to the sustained drop in oil prices, which made conditions worse for Canada's already depressed energy sector. The price of crude dropped below the crucial $30 level. Canadian oil sands oil, Western Canada Select(WCS) is at its lowest level ever at just under $17 per barrel.
As often happens, the Canadian dollar, the loonie, dropped in tandem with the price of oil. The loonie dropped below 70 cents, to 68.8 cents, its lowest level since 2003. While this may help some exporters, it will increase Canadian prices for imported fruit and vegetables and other items from the United States, as the U.S. dollar remains strong. There is speculation the Bank of Canada may again reduce interest rates to stimulate the economy.
As well as energy stocks, financials also moved the TSX lower. RBC fell 2..7 percent on the day to $67.70. Overall, the energy stocks lost 4.7 percent, while the financials declined by 2.3 percent. One minor bright spot in the resource sector is Vitality Air of Edmonton which is exporting fresh air from near Banff to China. You can apparently get about 100 hits from a bottle that costs between $10 and $20.
According to BNN, an empty oil barrel costs about U.S. $78.39 on Amazon. If producers have any spare empty barrels they can help their dismal cash flow situation by selling them off rather than filling them with $17 dollar a barrel oil from the Oil Sands. To make some return from their use of the barrels, oil producers would be better off selling them filled with fresh water at a value of about $66.55 US for a 55 gallon barrel. Even better, they could fill it with fresh air from Banff and ship it to China.
Markets also declined in Europe and the Shanghai Composite wiped out recent gains. Gold prices surged the most in six weeks. Yields on 10-year U.S. Treasury notes dipped below 2 percent as investors sought safe havens and doubts grow that the Federal Reserve will raise interest rates.


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