North American Markets in the red again
Concerns over the rescue package for automakers not getting the Senate approval sent North American markets lower. Dow fell 196 points to close 8,565 or 2.24 percent. Broader market indexes such as S&P 500 and NASDAQ also fell 26 and 58 points to close at 874 and 1,508 respectively. Weak commodity prices sparked a sell off in Toronto sending TSX down by 242.1 points to 8,391.9. The TSX Venture Exchange however edged up 7.9 points to 713.44. The Canadian dollar gained sharply 1.67 cents to 81.06 cents US.
Opposition for the bailout package for automakers gathered pace as both Democrats and Republicans voiced their opposition. Lawmakers seek wage cuts should the bill to receive the Senate approval. The industry employs millions of American directly and indirectly. A bankruptcy would therefore be a devastating blow to the US economy. In the melee, both General Motors (NYSE: GM) and Ford Motor Co. (NYSE: F) fell 10.4 percent and 10.8 percent to settle at $4.12 and $2.90 respectively.
Financials
Balance sheet worries prompted a whole sale decline of US banks as US Bancorp (NYSE: USB) warned over $1 billion write down in the fourth quarter for non performing loans. US Bancorp fell $2.82, or 10.2 percent, to $24.85. Other banks followed suit with JPMorgan Chase (NYSE: JPM) falling $3.58, or 10.7 percent, to $29.94, and Wells Fargo (NYSE: WFC) fell $3.29, or 11.3 percent, to $25.90. Morgan Stanley (NYSE: MS) and Merrill Lynch (NYSE: MER) fell 5.9 percent and 10.1 percent to close at $13.74 and $12.67 respectively. Citigroup (NYSE: C) also fell 8.8 percent to $7.57 while Bank of America (NYSE: BAC) declined 10.7 percent to $14.91.
Matters were no different in Toronto either. TD Bank fell 4.7 percent to close at $40.49 while Bank of Nova Scotia (TSX: BNS) fell 3.1 percent to close at $30.26. Bank of Montreal (TSX: BMO) also declined $1.12 to $33.14 while CIBC (TSX: CM) tumbled 3.3 percent to close at $48.00. Royal Bank (TSX: RY) also fell $1.29 or 3.7 percent to $33.96.
Energy
Even a 10 percent surge in oil prices to $47.98 a barrel on the New York Mercantile Exchange failed to spark enthusiasm in markets. EnCana Corp. (TSX: ECA) fell 7.4 percent to $55.22 while Suncor Energy Inc. (TSX: SU) fell $0.73 or 2.73 percent to $25.97. Petro-Canada (TSX: PCA) also fell $0.02 to close $28.98. Canadian Natural Resources (TSX: CNQ) however gained $2.10 to close at $44.75. Oilexco (TSX: OIL) fell marginally by 1.78 percent to close at $2.21.
In the US Exxon Mobil Corp. (NYSE: XOM) fell $0.05 to close at $80.02 while Chevron Corp. (NYSE: CVX) gained $1.02 to reach $79.46. ConocoPhillips (NYSE: COP) and Marathon Oil (NYSE: MRO) fell $0.50 and $0.44 to close at $52.81 and $25.00 respectively. BP plc (NYSE: BP) gained $0.97 to close at $47.14.
Metals
Similar to oil prices, an increase in gold prices failed to impress investors. The gold bullion gained sharply $17.80 to US$826.60 an ounce on the New York Mercantile Exchange. Goldcorp Inc. (TSX: G) fell $0.90 or 2.61 percent to $33.60 while Barrick Gold Corp. (TSX: ABX) fell $0.60 or 1.56 percent to reach $37.90. Kinross Gold (TSX: K) also declined a whopping 6.3 percent to settle at $19.32. In the US, Newmont Mining (NYSE: NEM) fell2.0 percent to close at $34.67. Meanwhile AngloGold Ashanti (NYSE: AU) fell a staggering 6.1 percent while Goldfields (NYSE: GFI) also fell 1.88 percent to close at $8.87.
Rio Tinto (ASX: RIO) continued to disappoint the market with its proposed plan to reduce the work force and postpone expansion programmes. The company apparently is facing a severe debt burden owing to its acquisition of Alcan, which was largely debt financed.
There is little to cheer at this stage as North American markets continue their attempt to find a way in a myriad of depressing economic news.
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