BUSINESS

Toronto, New York markets close on better note after big drop amid Greek woes

06/30/2015 08:02 EDT | Updated 06/30/2016 05:59 EDT
TORONTO - Buyers returned to North American stock markets Tuesday after frantic selling the previous session sparked by the Greek debt crisis drove most major indexes into the red for the year to date.

The S&P/TSX composite index closed up a solid 63.18 points at 14,553.33, but still finished the first six months of the year with a slight loss courtesy of an almost 318-point plunge on Monday.

The loonie was down sharply, off 0.64 of a U.S. cent at 80.06 cents amid speculation of a possible rate cut by the Bank of Canada after Statistics Canada reported gross domestic product contracted for a fourth consecutive month in April.

Gareth Watson, director, investment management and research, Richardson GMP, described the GDP numbers as "disappointing," noting economists had been expecting a 0.1 per cent gain versus the 0.1 per cent loss the economy actually delivered.

"It will get some people talking about potentially a technical recession if Q2 ends up being in negative territory," Watson said.

"But, more broadly speaking, the concern here is that the Bank of Canada might look at the data and feel that perhaps another interest rate cut is necessary ... and, of course, the Canadian dollar will always fall on those expectations that rates are going to go lower."

In New York, indexes were also higher after big drops Tuesday, with the Dow Jones industrial average advancing 23.16 points to 17,619.51 following a 350-point drop Monday, its biggest of the year.

The Nasdaq bounced back 28.40 points to 4,986.87 and the S&P 500 added 5.47 points to 2,063.11 and was marginally in positive territory for the year to date.

In commodities, the August oil contract rose $1.14 to US$59.47 a barrel, while the August gold fell $7.20 to US$1,171.80 an ounce.

Canadian markets will be closed Wednesday for the Canada Day holiday. New York markets will remain open but close Friday in advance of the July 4th Independence Day holiday on Saturday.

Despite the recovery on markets Tuesday, Greece's debt woes appear likely to drive volatility for some time to come.

Currently, talks are at a standstill and the Greek people face a referendum on Sunday called by Prime Minister Alexis Tsipras to accept or reject austerity terms demanded by creditors. As a result, Athens seemed certain to miss a midnight deadline Tuesday to make a 1.6-billion-euro repayment to the International Monetary Fund.

"It's been said that the IMF will give them a month's grace period before taking any type of action," Watson said, adding that the next big date is July 20 "when it owes, I believe, the (European Central Bank) some money."

So expect ongoing volatility between now and July 20 "no matter what the outcome (of the referendum) and definitely if the answer is 'No,'" he added.

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