The halving in oil prices between June, 2014, and January, 2015, has left energy producers with a cash shortfall. So for the first time in nearly two decades, they are more likely to dip into savings than to add to them, BNP Paribas analysts forecast.Larry MacDougal/The Canadian Press
North American stock markets closed higher Monday as gains in energy companies overshadowed a drop in technology shares as investors considered the possible fallout from Greek elections.
The S&P/TSX composite index gained 18.48 points to 14,797.83. The Canadian dollar slipped 0.26 of a cent to 80.23 cents US.
U.S. indexes also rose with the Dow Jones industrials adding 6.1 points to 17,678.70, the Nasdaq gained 13.88 points to 4,771.76 and the S&P 500 index was 5.27 points higher to 2,057.09.
In New York, officials told residents to stay at home as a blizzard forecasters call "life-threatening" may dump as much as two feet of snow from New York to Boston. Exchanges plan to remain open in the U.S., with the New York Stock Exchange's owner Intercontinental Exchange Inc. saying it'll be business as usual.
The last time NYSE's trading hours were changed because of a snowstorm was on Jan. 8, 1996, according to the exchange's website. Weather shut American equity markets for two days in October 2012 in the aftermath of Hurricane Sandy.
"We're sort of at an inflection point in the market," Bill Schultz, who oversees $1.2-billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. "It needs more to get it moving to higher levels. It's just trying to digest all of this information and try to make heads or tails of it. You saw the Greek election although that was not a big surprise."
The S&P 500 rallied 1.6 per cent last week after European Central Bank President Mario Draghi said it plans to buy up to €1.14-trillion ($1.28-trillion) of private and public securities.
European equities rose and the region's shared currency strengthened, while Greek stocks retreated, after Syriza, whose leader has pledged to renegotiate the nation's international bailout, won 149 out of a possible 300 seats in Parliament. Prime Minister-elect Alexis Tsipras' mandate is now to confront the nation's program of austerity, imposed in return for pledges of €240-billion in aid since May 2010.
The Greek elections "infused a little bit more risk into the market," Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. "More people are focusing on a pretty busy earnings calendar this week and the Fed commentary on Wednesday. Those are going to be the much bigger focus for traders than the situation in Greece."
Federal Reserve officials are scheduled to begin a two-day policy meeting Tuesday. The central bank is trying to determine whether declining oil prices, a slowdown in European growth and any fallout from the Greek elections will threaten the U.S. recovery as it considers raising interest rates. Chair Janet Yellen told reporters after the last meeting not to expect higher borrowing costs before the end of April.
John Stephenson, president and CEO of Stephenson & Co. thinks the Fed won't make any move until later on in the year.
"Because of all this uncertainty out there, they will be on hold longer than most people think. Consensus is they move in June but I don't think they move that soon. They'll move later."
Other major data points include the latest economic growth figures for Canada and the United States, both out Friday.
Economists believe Canadian gross domestic product grew 0.1 per cent in November. TD Bank said Monday that it now expects the economy to grow by just two per cent this year, compared with its December estimate of 2.3 per cent, because of falling oil prices.
TD also said that is expects oil will average US$47 this year. Oil prices have fallen more than 40 per cent since the end of November when Saudi Arabia rejected calls to cut production in order to support prices.
In the U.S., fourth-quarter GDP is expected to come in at an annualized rate of 3.1 per cent, down from a five per cent pace in the third quarter.
On the TSX, lift came from the industrials sector, up one per cent with Canadian National Railway rising 96 cents to $85.44 ahead of earnings coming out Tuesday.
The gold sector ran up 1.75 per cent per cent, while February bullion faded $13.20 to US$1,279.40 an ounce. However, the sector has surged 36 per cent this month while gold prices have steadily advanced.
The base metals sector was ahead 0.8 per cent as March copper rose four cents to US$2.54 a pound.
The energy sector advanced, up 0.3 per cent, with oil in New York closing down 44 cents at US$45.15 a barrel.
Telcos led decliners, down 1.85 per cent with Rogers Communications down $1.98 or 4.2 per cent to $45 after Canaccord Genuity cut its rating on the stock to hold from buy. It added it expects Rogers to report a "sluggish" quarter when it posts earnings Thursday.
Of the S&P 500 companies that have reported so far, 77 per cent have exceeded earnings projections after analysts reduced their estimates. Profit at S&P 500 companies climbed 1.1 per cent in the last three months of 2014, analysts predict, down from an October estimate of 8.1 per cent.
With files from The Canadian Press