The Toronto Stock Exchange was flat early Tuesday as rising gold prices offset an overall negative sentiment on most world markets with uncertainly still looming for the United States' fiscal situation.
The U.S. was likely to avoid defaulting its financial obligations, yet most equity markets were in decline with possible credit-rating downgrades looming for U.S. government debt.
Shortly after the open, the S&P/TSX composite index was up 10.32 points, or 0.08 per cent, to 12,955.95. Canada has a heavy concentration of gold companies, and the price of this commodity often rises in times of economic uncertainty.
The TSX was in a tough spot last week, losing ground four out of five days as U.S. lawmakers struggled to reach a deal to raise the debt ceiling in time for Tuesday's deadline.
However, a deal was reached over the weekend. The U.S. House of Representatives passed it on Monday, and the Senate was expected to do likewise on Tuesday.
However, credit-rating agencies such as Standard & Poor's and Moody's Investors Service were still believed to be considering downgrading U.S. debt, which would likely lead to higher borrowing costs south of the border.
Over the past week, disappointing data for the U.S. has been released on manufacturing growth last month and overall economic growth in the second quarter. A report Tuesday showed U.S. consumer spending fell in June for the first time in nearly two years as incomes barely rose.
Canada had its own bit of subpar numbers with GDP seeing a worse-than-expected drop of 0.3 per cent in May. Economists anticipated growth of 0.1 to 0.2 per cent.
On the commodities market, crude oil was down 45 cents U.S. to $94.44 U.S. a barrel in New York early Tuesday. Gold was up $18.70 U.S. to $1,640.40 U.S. an ounce.
The Canadian dollar was down 40 basis points to $1.0426 U.S..
On U.S. stock markets early Tuesday, the Dow Jones industrial average was down 66.75 points, or 0.55 per cent, to 12,065.74. The Nasdaq composite index declined 10.84 points, or 0.39 per cent, to 2,733.77.
Overseas stock markets also struggled.
The United Kingdom's FTSE index was down 26.69 points, or 0.46 per cent, to 5,747.74. France's CAC fell 25.44 points, or 0.71 per cent, to 3,562.61. Germany's DAX was down 71.56 points, or 1.03 per cent, to 6,882.42.
Japan's Nikkei index was off 120.42 points, or 1.21 per cent, to 9,844.59. In Hong Kong, the Hang Seng fell 241.91 points, or 1.07 per cent, to 22,421.46. Mainland China's Shanghai composite was down 24.52 points, or 0.91 per cent, to 2,679.26.
The TSX was closed for the civic holiday on Monday. On Friday, it fell 102.15 points, or 0.78 per cent, to 12,945.63. U.S. markets were open Monday. The Dow Jones dropped 10.75 points, or 0.09 per cent, to 12,132.49. The Nasdaq was down 11.77 points, or 0.43 per cent, to 2,744.61.
