A weak start in North America
North American markets opened on a weak note as economic news provided little reason to justify buying. Adding to already gloomy auto sector news, Toyota Motors also cut its earnings guidance and warned that the company may end up posting an operating loss for the fiscal year ending March 2009. It will be a loss in 70 years, should Toyota indeed reports a loss as predicted. US automakers continued to weaken as well and General Motors (NYSE: GM) and Ford Motor Co (NYSE: F) both recorded sharp declines. General Motors fell 21.6 percent to $3.52 while Ford fell 12.2 percent to $2.59. . The Canadian auto parts supplier Magna International (TSX: MG.A) also fell $2.73 or 7.5 percent to $33.51.
In the face of weak market sentiment Dow closed 59 points lower at 8,519. S&P500 and NASDAQ also fell 16.2 points and 32 points to close at 872 and 1,532 respectively. A decline in oil prices and a report by the Conference Board of Canada indicating a drop in Consumer confidence dragged Toronto down and the TSX fell 302.5 points or 3.5 percent to 8,250. The TSX Venture Exchange also fell 7 points to 692. The Canadian dollar gained 0.26 cents to 82.03 cents US.
Retail
In addition to auto makers, the US drugstore operator Walgreen Co (NYSE: WAG) also reported a 10 percent decline in its first quarter earnings. The company also confirmed its plans to cut new store openings. Walgreen shares fell 4.2 percent to $24.98. Both Wal-Mart Stores (NYSE: WMT) and CVS Caremark (NYSE: CVS) remained flat despite Walgreen’s poor performance.
Financials
Financials also weakened and JPMorgan Chase (NYSE: JPM) and Bank of America (NYSE: BAC) fell 1.6 percent and 1.9 percent to close at $29.82 and $13.53. Wells Fargo (NYSE: WFC) fell $1.94 or 6.6 percent to $27.42 while Morgan Stanley (NYSE: MS) declined 5.6 percent to reach $14.58. Citigroup (NYSE: C) continued to weaken and lost 5.9 percent to $6.75. Merrill Lynch (NYSE: MER) also lost $0.47 or 3.95 percent gain to $11.42.
Toronto financial stocks also weakened largely in response to falling Consumer confidence for the third consecutive month according to the Conference Board of Canada. The 3.3 decline for November brought the Consumer Confidence to 67.7 lower than during 1991 recession. TD Bank fell 2.25 percent to close at $41.20 while Bank of Nova Scotia (TSX: BNS) fell $0.15 to $29.25. Royal Bank (TSX: RY) also fell $0.60 or 1.7 percent to reach $33.90 while CIBC (TSX: CM) fell $1.38 to $48.52. Bank of Montreal (TSX: BMO) also lost $0.53 to $29.52. National Bank (TSX: NA) continued to rally even in the face of adversity and posted a3.6 percent gain to $29.90.
Energy
Oil continued to weaken despite a sharp production cut by the Organisation for Petroleum Exporting Countries (OPEC). Light, sweet crude fell $2.45, to $39.91 a barrel on the New York Mercantile Exchange. Exxon Mobil Corp. (NYSE: XOM) fell just $0.11 or 0.15 percent to settle at $74.91 while Chevron Corp. (NYSE: CVX) fell $1.46 to reach $69.39. ConocoPhillips (NYSE: COP) also declined 2.50 percent and Marathon Oil (NYSE: MRO) fell $1.06 or 4.1 percent to $24.89. BP plc (NYSE: BP) weakened $0.23 to close at $44.90. Petrohawk Energy (NYSE: HK) fell sharply 11.3 percent to $13.99 while Chesapeake Energy (NYSE: CHK) also declined 2.19 percent to reach $15.62.
Energy heavy Toronto market suffered more due to the drop in oil prices. EnCana Corp. (TSX: ECA) fell $2.90 to $51.00 while Husky Energy (TSX: HSE) shed $2.31 or 7.70 percent to $27.69. Petro-Canada (TSX: PCA) also tumbled $1.54 to close $25.51. Canadian Natural Resources (TSX: CNQ) meanwhile fell $2.19 to close at $42.68. Oilexco (TSX: OIL) continued to tumble and the stock fell $0.07 or 8.75 percent to close at $0.73.
Metals
The gold bullion however gained $9.80 to US$847.20 an ounce on the New York Mercantile Exchange. Gold stocks fell however and Goldcorp Inc. (TSX: G) fell $0.74 or 2.13 percent to $34.06. Barrick Gold Corp. (TSX: ABX) fell $0.79 percent to $39.65. Kinross Gold (TSX: K) also fell 3.08 percent to settle at $20.11. In the US, Newmont Mining (NYSE: NEM) declined 3.5 percent to close at $36.76. AngloGold Ashanti (NYSE: AU) also fell 1.45 percent to settle at $25.17. Goldfields (NYSE: GFI) fell 1.19 percent to close at $8.33.
At the time of writing Asian stocks are trading lower in response to Toyota’s potentially disappointing results.
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