TSX pummelled again as oil plunges

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

The losses continued to pile up on the Toronto stock market Wednesday as investors convinced the spring rally has run its course sold off across almost all sectors, with the main index losing more than 200 points.

The S&P/TSX composite index, down over 300 points during afternoon trading, closed down 190.9 points to 9,653.45 — the third straight day the index racked up a big triple-digit loss, adding up to a 6% retreat this week.

"The markets were up something like eight or nine weeks in a row at one point — so they were very powerful without a material correction," said Eric Brass, equity analyst at MFC Global Investment Management, adding that a correction had to be expected.

"It’s not going to be kind of a slam-dunk, V-shaped recovery, you’re going to see choppiness in economic data and in the equity markets."

The rally had sent the TSX up as much as 41% in mid-June from multi-year lows in early March. But the TSX is now in correction territory, down about 10% from the rally’s high.

The TSX Venture Exchange declined 35.54 points to 1,034.02.

Rising commodity prices and stocks played a big part in the market rally as traders hoped for a quick economic rebound.

But the energy sector was down 2% with oil prices lower for a sixth straight day from a peak of above US$73 last week.

The August crude contract on the New York Mercantile Exchange fell $2.79 to US$60.14 a barrel with losses picking up after the Organization of Petroleum Exporting Countries predicted that demand for crude has fallen so sharply, it will take another four years to recover to 2008 levels.

All the TSX sectors were lower with the exception of consumer staples.

Financials were a major weight with the sector down 1.75%. Scotiabank backed off $1.16 to $40.23.

Markets found little solace from a report from the International Monetary Fund, which said it expects the world economy to shrink by 1.4% in 2009, slightly worse than its earlier estimate of a 1.3% contraction.

But the IMF boosted its estimate for global economic growth in 2010 to 2.5%, up from its April projection of 1.9%.

The Canadian dollar declined 0.11 of a cent to 85.65 cents US.

Most New York markets finished slightly higher, following a strong auction of 10-year Treasury notes, which reassured investors worried that the government would have trouble finding enough buyers for the massive amount of debt it’s issuing.

The Dow Jones industrial average was up 14.81 points to 8,178.41. The Nasdaq composite index inched up one point to 1,747.17 but the S&P 500 was 1.47 points lower to 879.56.

Investors are also nervously awaiting second quarter earnings reports. Investors are not counting on a positive flow of earnings from the quarter "so the outlook is going to be big", added Brass.

Traders were also keeping watch on the annual summit of the leading G8 countries, including Canada.

World leaders agree that the global economy remains too shaky to begin rolling back massive stimulus measures right now. In their official statement on the economy Wednesday, G8 leaders said that they "note some signs of stabilization."

Canadian job data for June is to be released Friday and economists expect it to show the economy shed about 30,000 jobs during the month.

Other commodity prices fell alongside oil.

The base metals sector backed off 5.5% as the September copper contract in New York was down 6.65 cents to US$2.159 a pound. HudBay Minerals lost 22 cents to $6.62.

Moody’s Investors Service has upgraded Teck Resources Ltd.’s rating outlook to positive from negative after the company sold China a 17.2% stake in the company. Teck shares were down 97 cents to $17.87.

The gold sector was down almost 4% as the August bullion contract on the Nymex fell $19.80 to US$909.30 an ounce. Barrick Gold Corp. moved down $1.59 to $36.63.

The consumer staples sector was the only advancer, up 1.1%. Shares in drugstore chain Jean Coutu Group were sharply higher for a second day following a well-received earnings report, up 52 cents to $10.

(THE CANADIAN PRESS)

North American markets

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	Close	Change	YTD
Dow Jones	8,178.41	+14.81 or +0.18%	-6.81%
S&P 500	879.56	-1.47 or -0.17%	-2.62%
NASDAQ	1,747.17	+1.00 or +0.06%	+10.79%
TSX Composite	9,653.45	-190.90 or -1.94%	+7.41%

International markets

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	Close	Change	YTD
Nikkei	9,420.75	-227.04 or -2.35%	+6.33%
Hang Seng	17,721.07	-141.20 or -0.79%	+23.17%
SENSEX	13,769.15	-401.30 or -2.83%	+42.73%
FTSE 100	4,140.23	-46.77 or -1.12%	-6.63%
CAC 40	3,009.71	-38.86 or -1.27%	-6.47%
DAX	4,572.65	-25.54 or -0.56%	-4.94%

Bonds

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Bonds	$Current	$Previous	%Yield
Cdn. 10-year bond	104.14	103.57	3.26
Cdn. 30-year bond	120.05	119.60	3.82
U.S. 10-year bond	98.52	97.31	3.30
U.S. 30-year bond	101.13	99.13	4.18

Currency

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BoC Close	Today	Previous
Canadian $	0.8565	0.8576
US $	1.1676	1.1661

Euro Spot Rate	Today	Previous
Canadian $	0.6170	0.6164
Euro	1.6207	1.6223

Commodities

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Gold	AM	PM
London Gold Fix ($US)	$920.75	$918.00

Oil	Close	Change
WTI Crude Future (US)	$60.12	-$2.81 or -4.47%

(07/08/09)