ABI/ Inform

Canada: Canadian stocks market tumble amid flood of weak economic news

Asia News Monitor [Bangkok] 27 Nov 2011. 

Canadian stock market fell more than 200 points on Wednesday as commodity prices weakened amid growing about the European financial problem as well as the depressing economic data from both the U.S. and China.

The S&P/TSX Composite Index shed 223.48 points, or 1.89 percent, to close at 11571.71 after sliding more than 100 points earlier in the day. The S&P/TSX Venture Composite Index lost 32.77 points, or 2.11 percent, at 1522.15.

The mining and energy sectors led the main TSX index lower, down 4.1 and 3.17 percent respectively to hit the heavily-weighted material stock market as investors held growing fears on the forecast of decreasing market demand from the Europe.

The January oil contract fell 2.19 dollar to 95.82 U.S. dollar a barrel, Dec. gold was down 8.4 dollar to 1694.00 U.S. dollar an ounce. It closed below 1,700 dollars for the second time in a week after a sharp loss of 46.50 dollars on Monday.

On the Toronto Stock Exchange, the gold-heavy metals and mining group was down 4.10 percent with almost one-month biggest jump in the day. Goldcorp Inc. was the biggest decliner and its shares sharply lost 3.24 percent at 50.71 Canadian dollar and Barrick Gold Corp. lost 1.47 percent and closed down well above 50 Canadian dollar.

One of Germany's worst bond sales since the launch of the euro sparked concerns among investors that the debt crisis was even beginning to threaten Berlin. The Bundesbank was forced to buy 39 percent of the six billion euros of debt Germany had hoped to sell to investors after banks bought just 3.644 billion euros of the issue.

The German 10-year bonds yield surged 5.5 basis points to 1.964 percent while Italian and Spanish bond yields dipped after the European Central Bank has reported to intervene in the bond markets.

Germany's debt agency said that the shortfall in the sale reflected worsening market nerves and that it would buy back the retained amount to investors on secondary debt markets and that Germany would not face a funding shortage.

Adding to investor unease, a survey from financial information company Markit showed that the euro zone contracted for the third month running in Nov. and that the deteriorating economic picture is not just confined to Greece.

According to the survey, Markit suggested that the euro zone is contracting at a quarterly rate of 0.6 percent in the fourth quarter and that the problems are increasingly spreading to Europe' s two biggest economies, Germany and France.

Along with the disappointing grim European economic news, the poor data from China also strengthened their concerns over global growth.

A newly released report from HSBC showed that a Chinese manufacturing index slowed to 48 in November from 51 in October, which was the lowest data since March 2009.

China has been one of the few bright spots since the economic crisis of 2008 sent global economies into a slump and its strong economic growth has helped support higher commodity prices, which in turn have boosted resource stocks on the resource-heavy Toronto Stock Exchange.

The contraction in China and Europe sent the energy stocks down nearly 3 percent. Suncor Energy led the sector's retreat, sliding more than 4.64 percent to 29.01 Canadian dollar per share.

The financial sector fell 1.72 percent on Wednesday, pulling down the market even lower. A report said that some of Canada's largest financial institutions will be among those subjects to a new round of stress tests by the U.S. Federal Reserve to determine if major U.S. banks can withstand a downturn in the economy, among which the U.S. operations of Royal Bank of Canada and Bank of Montreal were included.

Royal Bank of Canada was off over 100 cents to 43.90 Canadian dollars and Bank of Montreal fell 8 cents to 56.20 Canadian dollars.

On the currency wise, as the intensifying euro zone debt crisis pushed up the safe-haven appeal of the U.S. dollar and oil and metals prices slid down, the Canadian dollar fell 0.95 cents to 95. 45 cents U.S. dollar on Wednesday. One U.S. dollar was buying 1.0476 Canadian dollars at 5 p.m. local time (22:00 GMT) on Wednesday compared with the 1.0381 Canadian dollars on Tuesday. - PNA