World stock markets including the TSX recovered Tuesday, a day after crude oil prices threatened to dip below $30 a barrel for the first time since 2002.
Stock boards were seas of green on Tuesday, with the S&P/TSX composite index up by more than 100 points shortly after opening, the Dow Jones Industrial Average up by almost 200, and the broader S&P up by more than 1 per cent.
The Canadian dollar was basically unchanged, hovering around the 70.4 cents US mark. The loonie appears to have found a temporary bottom after threatening to go below the 70-cent level for the first time since 2003.
The loonie rebounded because oil prices also appeared to have found a temporary floor after threatening to dip below $30 for the first time since 2002.
"The market is still very much gripped by the plunge in oil prices and this morning we're seeing a little better tone to oil prices," said Peter Cardillo, chief market economist at First Standard Financial in New York.
Stocks seesawed on Monday, too, before finishing lower. Earnings season is kicking off for many U.S. companies this week, giving investors a glimpse of whether the gloomy sentiment on the economy is warranted based on how much companies are actually earning.
"I think earnings season this time is going to take a back seat because oil is still going to be the dominating factor for investors," Cardillo said.
Other agreed that sentiment may outweigh fundamentals for now, with Royal Bank of Scotland putting it bluntly in a note to clients.
"Sell everything," the bank advised its clients.
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