Tuesday, 31 March 2015 20:18
TORONTO: Canadian stocks will make slim gains through to the end of 2015, with cheap crude oil expected to continue squeezing the energy sector in the coming months, a Reuters poll found.
The Toronto Stock Exchange’s S&P/TSX composite index will crawl to 14,960, by the middle of this year, little changed from Monday’s close of 14,908.39, according to the poll.
The median forecast of 23 analysts and strategists polled over the last week showed the TSX will rise a moderate 2 percent to 15,200 by the end of 2015 as commodity prices head for recovery.
Canada has lagged other major stock markets this year, rising just 2 percent after a 2014 run that saw it hit a record high of 15,685.13 in September.
Median expectations have improved since the last poll was taken in December, with a number of analysts expecting crude prices to trough around mid-year before picking up. Others forecast a longer recovery period.
“I think this year will be similar to last year with the tug of war between oil and commodities on one side and banking and the other sectors showing positive numbers on the other side,” said Allan Small, a senior investment adviser at wealth management firm HollisWealth.
Energy stocks make up roughly a fifth of the index’s weight.
Canada’s economy, a major oil producer, has begun to feel the sting from a plunge in crude prices since last June amid a global supply glut, lukewarm demand and no meaningful scale-back in production. That prompted the central bank to unexpectedly cut interest rates in January but it has kept them steady since then.
“Clearly low oil prices have taken a bite out of corporate profitability, hurt employment trends and reduced aggregate growth for the economy,” said Shailesh Kshatriya, associate director at Russell Investments.
“Prices will be volatile over the medium term and remain a formidable headwind for the energy sector and the economy.”
Copyright Reuters, 2015
