The general shakiness plaguing equity markets across North America continued its grip Monday, with markets across the board reporting more losses, and therefore, more lows they have not registered for years.
Financials were the major source of weakness in Toronto, where the S&P/TSX composite index drifted off as the day wore on, and eventually losing 45.89 points to 7,545.58.
GM of Canada Ltd. and the Canadian Auto Workers announced yesterday they had negotiated significant concessions affecting employees and retirees that will freeze their wages and pensions, increase personal expenses for health care benefits, reduce employee holidays and eliminate annual bonuses.
The cuts, which could mean hundreds of millions of dollars in additional savings for GM until the fall of 2012, are critical for the company's survival plan and to qualify for loans from the federal and provincial governments. It could help in making GM eligible for $6 billion in government aid.
Rio Tinto Group, the world’s third largest mining company, isn’t planning to slow development of the $3-billion Oyu Tolgoi copper-gold deposit in Mongolia, denying a report in the Sydney Morning Herald.
London-based Rio Tinto and Ivanhoe Mines Ltd., jointly developing Oyu Tolgoi, may proceed at a slower pace than planned, the newspaper reported today, citing Albanese. Rio Tinto and Ivanhoe have spent more than $1 billion on the project to date, Albanese said today.
Canada Mortgage and Housing Corp. said the seasonally adjusted annual rate of housing starts declined to 134,600 units in February from 153,500 units in January. That was much worse than expectations of 148,000 starts last month.
A briefing note from RBC Capital Markets said recent bank earnings reports reinforced the view that "despite tumultuous global markets, the Canadian financial sector has outperformed its global peers."
However, the currency has been under pressure form a string of negative economic news, including the loss of 129,000 jobs during January and the December merchandise trade report that showed Canada with its first monthly trade deficit since March 1976.
The TSX lost 6.5% last week, taking the main index to 2003 lows, while the Dow industrials lost 6.15%, leaving the blue-chip index at 1997 levels, prompting some analysts to say the market is ripe for a fairly big bounce - a natural reaction following such a precipitous decline over the past few weeks.
Investors hoping for signs the economy may turn around have found little lately to give them any optimism.
The World Bank said Sunday that the global economy will shrink this year for the first time since the Second World War and that the global financial crisis will make it tougher for poor and developing nations to access needed financing.
The bank added that trade is forecast to fall to its lowest point in 80 years in 2009, as economic hardship ripples across the globe.
TSX financials were lower, continuing to lose ground in the wake of a $62-billion U.S. quarterly loss handed in a week ago by American International Group Inc., once the world's largest insurer.
Royal Bank declined 57 cents to $28.83 while Manulife Financial shares fell 23 cents to $9.42.
The TSX energy sector rose as oil prices advanced after rising almost $2 U.S.on Friday.
EnCana Corp. gained 60 cents to $49.11 and Suncor Inc. ran up $2.07 to $29.42.
Drilling and well-servicing equipment maker Wenzel Downhole Tools Ltd. reported 2008 profits of $12.4 million, up from 2007 net earnings of $2.8 million. The Calgary-based company reported full-year revenue of $71.8 million compared to $54.2 million the year before and its shares surged nine cents to 70 cents.
The gold sector was down, as Barrick Gold Corp. declined $1.28 to $35.68.
Consumer discretionary stocks also weakened with Shaw Communications down 52 cents to $17.48.
Shares in fertilizer producer Agrium Inc. gained $2.08 to $42.36 after CF Industries rejected the Canadian company's unsolicited bid worth US$3.6 billion in cash and stock, calling the offer "grossly inadequate" and vowing to pursue a business combination with U.S. rival Terra Industries Inc.
The Canadian dollar lost 0.84 cents on the day to 76.94 cents U.S., off lows dating back to September 2004.
BAYSTREET
Of the 13 TSX sub-groups, 11 were pointed to the bad at the close. Health-care stocks were the worst off, down 3.3%, while information technology, financials and gold all had 2.6% losses.
The two gainers were energy, up 2.7%, followed by utilities, up only 0.1%.
The TSX Venture Exchange gave back 13.52 points to 815.60, while the Nasdaq Canada index faded 11.45 points to 363.09
ON WALLSTREET
The Dow Jones industrial average dropped 91.60 points to close the day at 6,535.34.
The S&P 500 index skidded 8.98 points to 674.40 while the Nasdaq composite index subtracted 26.95 to 1,266.90
Merck & Co. has offered Schering-Plough shareholders $10.50 U.S. in cash and just over half of one Merck share for each of their shares. The price represents a 34% premium to Schering-Plough's closing stock price on Friday.
Merck shares slipped 9% and Schering shares rallied 13%.
Newspaper publisher McClatchy said it would cut 1,600 jobs, or 15% of its workforce, because of a decline in advertising revenue. McClatchy owns The Miami Herald, Sacramento Bee and Anchorage Daily News, and has been making heavy debt payments since it bought Knight Ridder Inc. in 2006.
In the U.S., Capital One Financial Corp. said today it is cutting its dividend 87% to five cents in an effort to preserve capital, following in the footsteps of JPMorgan Chase & Co., Wells Fargo & Co. and others. Its shares rose 69 cents to $9 U.S.
Heavyweight lender HSBC, Europe's largest bank, plunged over 24% in Hong Kong trade ahead of its offering of new shares to raise capital. In New York, HSBC Holdings fell $1.31 to $24.19 U.S.
Moody's Investors Service today revised the outlook on HSBC Holdings long-term senior debt rating to negative from stable and cut HSBC Bank's bank financial strength rating to C-plus from B.
A variety of bank shares bounced back, with Bank of America leading the way, rising 17%
Elsewhere, McDonald's was also in focus as the fast-food chain warned that the stronger dollar and commodity costs will likely squeeze its first-quarter revenue results and margins.
The fast-food chain anticipates quarterly sales to be off by at least $600 million U.S. and earnings to be hurt by seven cents to nine cents per share if foreign-currency rates stay at current levels.
General Electric helped lift New York after Goldman Sachs said it expects GE Capital, the conglomerate's finance arm, to be near break-even this year. Its shares advanced 48 cents to $7.84 U.S.
Treasury prices fell, raising the yield on the benchmark 10-year note to 2.91% from 2.87% Friday. Treasury prices and yields move in opposite directions.
The April crude contract on the New York Mercantile Exchange rose $1.43 to $46.95 U.S. a barrel.
The April bullion contract on the Nymex eased $24.70 to $918 U.S. an ounce.
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