Five drivers for Canadian equity investors to watch

Oil prices wield the biggest influence, says BMO's Paul Taylor.

Diana Cawfield 18 June, 2015 | 5:00PM

There are five main drivers of the Canadian equity market right now, says Paul Taylor, chief investment officer, asset allocation, with BMO Global Asset Management.

The biggest of the five is the price of oil. "Oil is definitely the trump card on the current market," says Taylor. "Low oil prices have a negative dampening effect on Canadian economic activity and that just simply reflects that we're still a trees-and-rock-based economy."

The most direct impact of oil prices is probably on corporate earnings, Taylor says. He estimates that 21% of the Canadian market is directly related to energy. With the price of commodities down by approximately 50% from last summer, there has been a very negative impact on corporate earnings.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Canadian Pacific Railway Ltd422.67 CAD0.60
Dollarama Inc51.48 CAD0.18

About Author

Diana Cawfield

Diana Cawfield  Diana Cawfield is an award-winning writer who has been a regular Morningstar contributor since 2000. Her numerous publication credits include the Toronto StarAdvisor's Edge and Chatelaine, as well as the Canadian Securities Institute's online educational services.

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