TSX closes 813 points down
Data, uncertainty over bailout depresses Wall Street
Oct 02, 2008 05:02 PM
Kristine Owram
THE CANADIAN PRESS
The Toronto stock market had its second 800-plus drop in less than a week today, and had its lowest close since June 2006, while New York indexes also ran deeply into the red.
Toronto’s S&P/TSX composite fell 813.97 points or seven per cent to 10,900.54. On Monday, the market made history by plunging 840.93 points, slightly more than a record set in October 2000.
Today’s slide on Canada’s largest stock market was led by Potash Corp. of Saskatchewan (TSX: POT) and Agrium Inc. (TSX: AGU) as major brokerage Merrill Lynch cut its ratings for global fertilizer makers and said it expects earnings to fall.
Oil company shares were also down as the November crude contract on the New York Mercantile Exchange declined $4.56 to US$93.97 a barrel.
The TSX Venture Exchange moved down 94.69 points to 1,311.96.
The Canadian dollar fell 1.56 cents to 92.6 cents US. The dollar has dropped more than four cents since Friday.
In New York, markets were dragged lower as traders responded to disappointing economic data and assessed the prospects for a U.S. government bailout of the financial system.
The Dow Jones industrial average lost 348.22 points to 10,482.85.
The Nasdaq composite index was down 92.68 at 1,976.72 while the S&P 500 declined 46.78 to 1,114.28.
Vincent Delisle, a portfolio strategist with Scotia Capital, said the markets seem to be responding to fear that the U.S. government’s financial rescue plan might not be enough to ward off a recession.
“Getting a package done is heading in the right direction, but it doesn’t take away the risk that we’re probably already in a recession in the U.S. and the data just got uglier,” Delisle said in an interview.
“Recession fears are really ruling this market.”
The Senate voted 74-25 Wednesday night to approve the Bush administration’s package, which now moves to the House for a vote expected Friday.
Since the lower house of Congress rejected the bailout Monday, the proposal has been sweetened with $100 billion in tax breaks and an increase in the limit on federal insurance of bank deposits to $250,000. The cost of the bill to taxpayers is now close to $1 trillion.
The White House says the need is urgent for the taxpayers to buy hundreds of billions of dollars in bad debts in an effort to free up credit markets.
Banks are fearful of making loans, restricting the availability of cash to businesses and consumers alike.
Gareth Watson, Canadian equity adviser at ScotiaMcLeod, said volatile financial markets are in “uncharted territory,” prompting “knee-jerk reaction” from traders. Today’s dramatic declines despite improving prospects for the bailout bill show that the package isn’t the solution to U.S. economic woes, he added.
“This bailout package is only the first in many, many steps that need to be taken in order to get stability in the credit markets, hopefully stability in the U.S. housing market as well, and if you can create those two things, then at least you can create an environment where we might be able to see a turnaround in the U.S. economy,” Watson said in an interview.
“My personal view is the whole idea of this bailout package is a gesture that the U.S. government is on-side versus the absolute solution to everyone’s problems.”
In economic news, U.S. government data showed applications for unemployment benefits rose slightly last week to a seven-year high – well above analyst expectations. The seasonally adjusted number of 497,000 was the highest since just after the Sept. 11 terrorist attacks in 2001.
As well, the U.S. Commerce Department reported today that orders for manufactured goods dropped by four per cent in August, compared to July. That’s a much worse performance than the 2.5 per cent decline that economists had expected.
The weakness was led by big declines in orders for aircraft, down 38.1 per cent, and autos, which fell by 10.6 per cent, the worst performance in nearly six years.
Meanwhile, U.S. regulators have extended the ban on short-selling of more than 800 financial company shares.
The credit markets showed some increased strain today. The yield on the three-month U.S. Treasury bill, the safest type of investment, fell to 0.7 per cent from 0.79 per cent late Wednesday. The historically low yields indicate investors are willing to accept the smallest of returns to safeguard their money.
In Toronto, PricewaterhouseCoopers reported today that for the first time in recent memory, there were no initial public offerings on the Toronto Stock Exchange during the third quarter.
It was the weakest new-issue activity on the TSX ever tracked by the accounting and consulting firm, continuing a downward trend which started more than a year ago. The previous low in TSX new issues was four during the third quarter of last year.
Potash Corp. was down $35.50 or 26 per cent to $101 and Agrium fell $13.47 or 23 per cent to $45.01 as the bloom continued to come off the fertilizer boom.
The TSX financial sector was down 3.4 per cent, while the energy group lost 8.6 per cent.
EnCana (TSX: ECA) was down $6 to $59.46 while Suncor Energy (TSX: SU) lost $4.70 to $36.
The metals sector lost 10.1 per cent with Teck Cominco (TSX: TCK.B) down $3.59 to $24.32.
The gold sector plunged 16.2 per cent as the December bullion price on the New York Mercantile Exchange declined $43 to US$844.30 per ounce.
Goldcorp (TSX: G) was down $6.81 or 20 per cent to $27.51 while Barrick Gold (TSX: ABX) fell $6.52 or 16 per cent to $33.25.
肥料股降级 加股再暴挫 TSX跌813点 恐陷衰退道指泻348点
加通社多伦多电/多伦多股市在不足一周内第二次暴跌逾800点，把加拿大基准指数降至2006年6月以来的最低水平。纽约的主要指数也陷入深渊。
多伦多S&P/TSX综合指数周四跌813.97点，报10,900.54。它周一蒸发840.93点，创下跌势最严重的一天，略高于2000年10月份的损失。TSX创业交易所指数跌94.69点，报1,311.96。
加拿大最大股票市场周四的跌势罪魁祸首应数沙省的肥料公司Potash Corp. (TSX代号：POT)和Agrium Inc. (TSX代号AGU)。美林(Merrill Lynch)降低此两间肥科公司的信贷评级，并认为它们的盈利将下降。
11月期油在纽约商品交易所每桶跌4.56美元，至93.97美元。
加元亦大幅下挫1.56美仙，至92.6美仙，自上周五以来总共跌逾4美仙。
在华尔街，交易员忙于评估美国政府的新救市方案之际，负面经济数据拖低大市。反映蓝筹股走势的道琼斯工业平均指数泻348.22点，报10,482.85。纳斯达克综合指数跌92.68点，报1,976.72，破两千点大关。标准普尔500指数跌46.78点，报1,114.28。
丰业资本投资策略师戴里素(Vincent Delisle)认为，市场情况可能是回应投资者恐怕美国政府的救市方案不足以回避经济衰退。他接受访问时说：“实施方案是正确方向，但不等于消除了美国可能陷入衰退的风险，而且公布的数据每下愈况。陷入衰退的恐惧笼罩市场。”
美国参议院周三晚以74票对25票通过布殊总统的新救市方案后，众议院周五投票。
自从众议院周一否决原来的方案后，政府修改建议，加上了1,000亿美元的税务优惠和保障银行存款的上限从10万美元增至25万美元。估计新救市措施的总成本增至1兆美元(1万亿美元)。
多伦多金融股跌3.4%，能源股跌8.6%，基本金属股跌10.1%。
12月期金在纽约商品交易所每盎士跌43美元，报844.30美元，拖累多伦多黄金股损失16.2%。
11月期油也跌至两周以来最低水平，周四在纽约每桶跌4.56美元，报93.97美元。