Loonie, oil prices weaken, stock indexes down

North American markets shot higher today after China’s slowest annual growth pace in 25 years raised hopes of further stimulus measures, and on strong results from USA banks.

American markets were closed Monday for the Martin Luther King Jr. holiday after having started the new year with their worst ever opening two-week period.

The Toronto Stock Exchange’s S&P/TSX composite index ended the session up 60.07 points at 12,002.24, recouping less than half of its 131-point decline on Monday.

The currency showed a brief gain after the Bank of Canada announced at 10 a.m. ET that its key interest rate would be held at 0.5 per cent.

The Canadian dollar remained near the lowest levels in almost 13 years but rose slightly to 68.85 cents USA, up 0.03 from Friday’s close.

Still oil prices diverged on Tuesday – Brent was up and USA crude was down, dragging down the energy and materials stocks.

Consumer discretionary companies have seen the biggest stock market declines, but the pain is spread nearly across the board (see chart).

The biggest decline was in metals and mining, with the six-stock index down 7.4 per cent. Copper producers First Quantum Minerals (TSX:FM) and HudBay Minerals (TSX:HBM) fell the most.

Overseas markets fared no better. Japan’s Nikkei index entered a bear market, down 20 percent from its peak in June, and European benchmarks lost between 3 and 4 percent. Earlier Monday, it traded as low as 68.57 cents United States near levels last seen in 2003.

USA corporate earnings are unlikely to offer relief: S&P 500 earnings on average are expected to fall 4.4 per cent, according to Thomson Reuters data.

Telecoms slumped 5.9 percent, while industrial stocks fell 1.5 percent.

While the dollar fell against the yen, it was strong against emerging markets, compounding the misery for many countries already suffering from low oil prices.

The Shanghai composite index, China’s largest, surged 3.2 per cent, while Hong Kong’s Hang Seng rose 2.1 per cent.