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Monday, December 01, 2008
Financial Post: "TSX in biggest drop since Black Monday"
The Financial Post reports:
Canada's top equity exchange fell fast and hard on Monday as investors reacted negatively to news of a brewing coalition-government and more importantly a steep across-the-board drop in world commodity prices.
Canadian stocks ended the session in negative territory, halting a six-day winning streak for the S&P/TSX Composite Index. The index plunged 864.40 points or 9.32% to 8406.21, eclipsing the steep fall on Nov. 20 that was the biggest since Black Monday in October 1987, while the TSX Venture exchange fell 27.23 points or 3.55% to 739.120 points. The Canadian dollar closed down 53 basis points to 80.31 cents US.
The backdrop to trading on Monday was confirmation that the federal Liberals and NDP parties have formed a coalition government in order to topple the Conservative government.
Morgan, Meighan and Associates president and chief portfolio manager Michael Smedley said investors are no doubt irritated by the prospects of another election, but he downplayed the effect it had on Monday's sell-off.
"There is a lot of annoyance and disgust around the political antics in Canada, but on the other hand it is a market retreat not unlike what we saw elsewhere yesterday and the fall in commodities is the bigger factor in the downturn here in Canada."
Taking its toll on energy stocks was crude oil, which fell below US$50 to close at US$49.28, down US$5.15. The Organization of Petroleum Exporting Countries deferred a decision to reduce output for another two weeks, until its regularly scheduled meeting on Dec. 17. OPEC said it wants more time to assess the impact of a 1.5-million barrel reduction agreed upon in October, but added that it will likely reduce output at the next meeting. The S&P/TSX Energy subindex was down 265.11 points to 2056.71, with Canadian Natural Resources Ltd. down 14% and Suncor Energy Inc. down 16%.
Mining stocks were roughed up by falling base metals prices that reacted to deteriorating demand and gold prices, which fell US$42.20 to US$776.80. The losing combination sent the Materials group down more than 269.33 points to 1696.97.
Read the rest.
Thanks for the stability, Dion!
Also, I think it's time to get some gold, what a buying opportunity.
Posted by Kalim Kassam on December 1, 2008 in Current Affairs | Permalink
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Comments
The Dion Short -- active traders will make a killing.
Official comfirmation of the US recession didnt help I'm sure.
Posted by: Matthew Johnston | 2008-12-01 4:31:55 PM
The index plunged 864.40 points or 9.32% to 8406.21............. The backdrop to trading on Monday was confirmation that the federal Liberals and NDP parties have formed a coalition government in order to topple the Conservative government.
Posted by Kalim Kassam on December 1, 2008
The Dow Jones industrial average was down 8% today. Oil was down almost 9%. Of course this has no bearing on the Canadian markets.
Posted by: The Stig | 2008-12-01 4:32:57 PM
Stig,
That quotation was from the article, not me, but of course you're right that this drop was certainly not contained in Canada, nor was it primarily driven by political instability.
Posted by: Kalim Kassam | 2008-12-01 4:37:50 PM
Kalim,
"this drop was certainly not contained in Canada, nor was it primarily driven by political instability."
So why the "Thanks for the stability, Dion!" tag? How is this his fault?
Posted by: Fact Check | 2008-12-01 4:53:52 PM
Well he didn't bring stability did he, Fact Check?
We can only guess at what the market reaction might have been if things were more stable in Ottawa.
The Harper-Flaherty approach to this crisis was the best I've seen anywhere.
Posted by: Matthew Johnston | 2008-12-01 4:59:14 PM
Dion shrugged and the stock market crashed.
Could it be? Is Stephane Dion.. Atlas!?
Posted by: Terrence Watson | 2008-12-01 5:02:50 PM
So Matthew and Terrence *DO* blame Dion for the fall of the TSX ... even though the Dow took the same fall. How foolish! Or, in fancier terms, how post hoc ergo propter hoc!
Posted by: Fact Check | 2008-12-01 5:34:03 PM
Deja Vu? Am I on the Canadian version of Fox News now? They didn't tire to blame the decline of the Dow on Obama's potential election, then on his election etc.
First the poll, now this....
Western Standard: Canada's only political satire magazine, subscribe today.
Posted by: Snowrunner | 2008-12-01 5:47:29 PM
"So why the "Thanks for the stability, Dion!" tag? How is this his fault?"
While instability and political uncertainty are never good for the market, this isn't Dion's fault.
But I fear that as long as Dion or anyone else seeks to cure the recession by means of stimulus spending or big spending infrastructure programs (as FDR tried in the Great Depression), we'll be seeing worse days ahead for the stock market and the wider economy.
Posted by: Kalim Kassam | 2008-12-01 7:14:12 PM
To be fair, I think the coalition talk, strangely, had a limited effect on Canada's market. That was drowned out by the noise south of the border. Believe me I would like nothing better than to stick the blame on the 3 retardos - but I don't think their damage has yet been done.
Posted by: Faramir | 2008-12-02 12:27:57 AM
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