Global economic worries sends stocks tumbling; TSX loses, led by oils, metals

| North American markets | International markets | Bonds | Currency | Commodities |

The Toronto stock market tumbled Monday as a report from the World Bank said the global economy will shrink much more than expected this year, lowering hopes for a strong economic recovery later in 2009.

The main S&P/TSX composite index dropped 453.77 points or 4.4% to 9,834.18 — its first close below the 10,000 mark since May 11 and the worst one-day point loss since early December.

The World Bank said that the world economy will shrink 2.9% in 2009 compared with a previous forecast for a 1.7% decline.

The losses added to a drop of over three% on the TSX last week as traders wondered if the rally, which had boosted the TSX by as much as 41% on hopes for an economic recovery by year’s end, was running out of momentum.

"I don’t think the equity markets got it wrong, that the economy was turning — I think they got the turn," said Warren Jestin, chief economist at Scotiabank.

"The big deal is how strong (a recovery there will be) and even in the equity markets you have to remember we have rallied a long way, but we’re still quite a way from previous peaks. We’re not in for a very robust recovery by any means."

All sectors were lower, but the TSX was punished in particular by falling oil and mining stocks, two of the big drivers of the spring rally.

The energy sector fell 6.5% lower as a strong U.S. dollar helped push the July crude contract on the New York Mercantile Exchange down $2.62 to US$66.93 and well off a a seven-month high of US$73 a barrel in the middle of last week. Sector heavyweight EnCana Corp. fell $3.35 to $54.66.

A stronger greenback also helped send the Canadian dollar down 1.34 cents to 86.76 cents US, after falling as low as 86.53 cents.

The TSX Venture Exchange gave back 40.14 points to 1,078.66.

U.S. markets were also lower after also losing ground last week.

The Dow Jones industrial average fell 200.72 points to 8,339.01, after giving up almost three% last week. The Nasdaq composite index lost 61.28 points to 1,766.19, while the S&P 500 dropped 28.19 points to 893.04.

The Toronto base metals sector was down more than nine% as the price of copper in New York fell 11.85 cents to $2.132 a pound.

Peter Cardillo, chief market economist at brokerage house Avalon Partners Inc. in New York, said investors want to see stability in commodity prices — not a surge or a tumble. A sharp rise in commodity prices hurts consumers, while a sharp drop is sign of weak demand around the world.

"You need a balancing act within the commodity markets," Cardillo said.

Teck Resources Limited shares were down $2.07 to $16.76 even after it said Friday that it expects its 2009 coal sales to be at the upper end of its guidance for 18 million to 20 million tonnes.

The August bullion contract on the Nymex was down $15.20 to US$921 an ounce, taking the gold sector down 5.5%. Barrick Gold Corp. lost $1.96 to $36.68.

The financial sector fell 3.5% with Royal Bank down 90 cents to $45.10.

Shares of Manulife Financial Corp. tumbled $2.83 or 12.15% to $20.42 after The Ontario Securities Commission said it was investigating the insurer over what it told investors about the risks of its guaranteed fund business.

In corporate news, shares in Verenex Energy Inc. fell $1.98 or 23% to $6.60 as the Calgary-based company’s sale to China National Petroleum Corp. hit a stumbling block with allegations of improper bidding by Libya’s national oil company.

It was also the end of an era for one of Canada’s oldest companies as Nortel Networks Corp. shares were suspended by the TSX. The company, which has been restructuring under court protection from creditors, has asked for the shares to be delisted, a process that usually takes a few days.

The request came after the former Canadian tech heavyweight signed a deal to sell its most of wireless business to Nokia Siemens Networks B. V. for US$650 million and said it’s in advanced talks to sell the rest of its operations.

Nortel shares closed Friday at 18.5 cents — a far cry from the high of $124.50 from July 2000 when the company accounted for more than one-third of the value of all the companies listed.

(THE CANADIAN PRESS)

North American markets

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	Close	Change	YTD
Dow Jones	8,339.01	-200.72 or -2.35%	-4.98%
S&P 500	893.04	-28.19 or -3.06%	-1.13%
NASDAQ	1,766.19	-61.28 or -3.35%	+11.99%
TSX Composite	9,834.18	-453.77 or -4.41%	+9.42%

International markets

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	Close	Change	YTD
Nikkei	9,826.27	+40.01 or +0.41%	+10.91%
Hang Seng	18,059.55	+138.62 or +0.77%	+25.52%
SENSEX	14,521.89	+256.36 or +1.80%	+50.53%
FTSE 100	4,234.05	-111.88 or -2.57%	-4.51%
CAC 40	3,123.25	-98.02 or -3.04%	-2.94%
DAX	4,693.40	-146.06 or -3.02%	-2.43%

Bonds

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Bonds	$Current	$Previous	%Yield
Cdn. 10-year bond	102.68	101.96	3.43
Cdn. 30-year bond	118.59	117.44	3.90
U.S. 10-year bond	95.25	94.67	3.70
U.S. 30-year bond	96.72	95.76	4.45

Currency

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BoC Close	Today	Previous
Canadian $	0.8676	0.8810
US $	1.1526	1.1351

Euro Spot Rate	Today	Previous
Canadian $	0.6259	0.6317
Euro	1.5976	1.5829

Commodities

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Gold	AM	PM
London Gold Fix ($US)	$924.00	$919.25

Oil	Close	Change
WTI Crude Future (US)	$66.93	-$2.62 or -3.77%

(06/22/09)