P.M. market numbers for January 22, 2010

By Staff | January 22, 2010 | Last updated on January 22, 2010
4 min read
| North American markets | International markets | Bonds | Currency | Commodities |

The Toronto stock market fell sharply Friday, its third consecutive decline as investors worried about the repercussions of proposed new regulations in the U.S. financial sector and moves by China to tighten lending.

The S&P/TSX composite index fell 125.67 points to 11,343.43 for a loss of 341.94 points or 2.9% this week.

The TSX financial sector was down 1.56% Friday on top of a 2% drop Thursday after U.S. President Barack Obama unveiled plans for limits on how large big banks in the United States can be. He also aims to end some of the risky trading practices that large financial companies have used in recent quarters to boost profits.

"There’s no doubt about it: what happens to the financials in the United States is going to affect what happens in Canada," said Blair Falconer, portfolio manager at HSBC Securities Canada.

"Canadian financials have a fair amount of exposure — both the banks and the insurance companies — to the U.S. You have large retail operations for pretty much all the major banks in various parts or the U.S. The insurers have (also) pushed into the U.S. with some very large purchases over the years."

Royal Bank gave back $1.82 to C$52.88 and Sun Life Financial fell 64 cents to $31.71.

The Canadian dollar was down 0.6 of a cent to 94.51 cents US.

Also overhanging markets were concerns about how much China can help developed countries pull out of their severe economic slump.

Rapid growth in the Chinese economy has reinforced worries that Beijing will move to cut lending and tighten monetary policy to put a lid on inflation.

That, in turn, could dampen demand for western products and services, slowing recovery elsewhere and put more pressure on commodity-related stocks and sectors in Canada.

Earlier this week, the Chinese central bank raised reserve requirements for banks "so the banks, as loans come up, are really not going to be able to re-lend money even to some of their better clients, much less the more dicey ones," said Falconer.

"This will cause a contraction of credit when it comes to China and that’s really affected the kind of commodities where China is the big purchaser."

The base metals component on the TSX lost 0.27% as copper prices moved ahead five cents to US$3.35 a pound. Teck Resources was down 97 cents to C$38.77 while Equinox Minerals rose 18 cents to $3.83.

Energy stocks were weak as the March crude contract on the New York Mercantile Exchange dipped $1.54 to US$74.54 a barrel. The energy sector was off 1.56% as Canadian Natural Resources lost $1.61 to C$69.80 while Suncor Energy backed off 65 cents to $35.20.

The gold sector was strongest, up 0.89% even as the February bullion contract on the Nymex was down $13.50 to US$1,089.70 an ounce. Barrick Gold Corp. gained 35 cents to C$38.66.

The TSX Venture Exchange was 9.24 points lower to 1,549.67.

The mood in the market was dark enough that upbeat earnings Friday from General Electric Co. and McDonald’s Corp. weren’t enough to sway investors.

GE reported a better-than-expected profit and also said orders and backlogs for its products and services are increasing, a sure sign business will pick up in 2010. That helped its shares rise nine cents to US$16.11.

Meanwhile, McDonald’s fourth-quarter earnings showed that it was holding up better than its competitors and the company’s stock rose 19 cents to US$63.39.

But falling bank stocks helped send New York’s Dow Jones industrial average tumbling 216.9 points to 10,172.98, for a loss of 4.2% this week.

The Nasdaq composite index lost 60.41 points to 2,205.29 while the S&P 500 index lost 24.72 points to 1,091.76.

Investors are also dismayed to see opposition building against Federal Reserve chairman Ben Bernanke for another four-year term, even as the White House described President Barack Obama as confident about his confirmation.

A time for a confirmation vote still hasn’t been set. Officials at one time had hoped that it would come this week. Bernanke’s term expires Jan. 31.

"Uncertainty at the head of the Federal Reserve is maybe just about the last thing needed right now," said David Watt, senior fixed income and currency strategist at RBC Capital Markets.

"The move toward eventually implementing an exit strategy (for stimulus) will take deft, graceful and delicate decision making to sustain economic growth. Such would be difficult for a seasoned veteran policy-maker let alone a rookie chairman."

In other corporate news, candy maker Hershey Co. said Friday that it has no plan to bid soon for British competitor Cadbury LLC, making it all but certain that Kraft Foods Inc.’s US$19.5-billion bid will proceed without competition. However, the Hershey Co. had three more days to make a competing bid, leaving itself room to reconsider.

(The Canadian Press)

North American markets Back to Top
Close Change YTD
Dow Jones 10,172.98 -216.90 or -2.09% -2.45%
S&P 500 1,091.75 -24.73 or -2.22% -2.09%
NASDAQ 2,205.29 -60.41 or -2.67% -2.81%
TSX Composite 11,343.43 -125.67 or -1.10% -3.43%

International markets Back to Top
Close Change YTD
Nikkei 10,590.55 -277.86 or -2.56% +0.42%
Hang Seng 20,726.18 -136.49 or -0.65% -5.24%
SENSEX 16,859.68 -191.46 or -1.12% -3.46%
FTSE 100 5,302.99 -32.11 or -0.60% -2.03%
CAC 40 3,820.78 -41.38 or -1.07% -2.94%
DAX 5,695.32 -51.65 or -0.90% -4.40%

Bonds Back to Top
Bonds $Current $Previous %Yield
Cdn. 10-year bond 103.12 102.63 3.36
Cdn. 30-year bond 116.85 116.32 3.98
U.S. 10-year bond 98.25 98.14 3.58
U.S. 30-year bond 97.84 98.02 4.51

Currency Back to Top
BoC Close Today Previous
Canadian $ 0.9451 0.9511
US $ 1.0581 1.0514

Euro Spot Rate Today Previous
Canadian $ 0.6680 0.6749
Euro 1.4969 1.4816

Commodities Back to Top
Gold AM PM
London Gold Fix ($US) $1,096.50 $1,084.00

Oil Open Change
WTI Crude Future (US) $74.40 -$1.68 or -2.21%


Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.