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Feb. 10, 2009 (Baystreet.ca) --
04:42 pm EST
Equity markets took the shaft to the ground floor Monday, without waiting for the elevator, it seems. As a result, some markets experienced lows they hadn't seen in more than a decade.
The S&P TSX Composite Index took a walloping of 307.79 points to close at 7,642.20, as a fresh wave of pessimism trumped assurances from U.S. regulators on the financial system.
Canadian investors also took in a major deal as Nova Chemicals Corp. has agreed to be bought out for $2.3 billion U.S. by Abu Dhabi-based International Petroleum Investment Co. Nova stock soared by 300%.
Canada's big banks are preparing to report their first-quarter earnings for 2009 starting this week and Warne said expectations are fairly minimal.
Industrial stocks have lost, as Canadian Pacific Railway dropped 3.1% and Canadian National Railway was down 2.6%.
Energy stocks were down, as crude oil turned sharply lower on Monday.
Financials gave back early gains, Royal Bank leading the decliners with a 2.4% drop.
Bank of Montreal was up 2% after its Harris Financial announced the appointment of John Rau and Arnold Donald to its Board of Directors.
The sector received an early boost as troubled U.S. lender Citigroup is reportedly in discussions with federal officials for a possible expansion of the government's stake in the company.
Meanwhile, gold and materials stocks were in the red as the precious metal has surrendered some of last week's sharp rally.
Barrick Gold dropped 3.4% after beating downgraded by RBC Capital Markets
Diversified miner Teck Cominco was up 4% after erasing an early slide. The company announced Friday after the closing bell that it has agreed to sell its indirect interest in Sociedad Minera El Brocal to Compania de Minas Buenaventura for $35 million U.S. in cash.
Canadian Hydro Developers lost 5% after the company reported that fourth-quarter profit plunged by 78% year over year
From the economic world, retail sales in December fell 5.4% in December to $33 billion - the largest monthly decline in over 15 years.
Statistics Canada says three-quarters of the December retail decline was rooted in the automotive sector, without which retail sales fell 1.8%.
Cheerful news came out Monday, however, that consumer confidence reversed ground in December and was making its way up to its highest levels since August.
The Harris-Decima survey of 2,000 people between Feb. 5 and Feb. 15 found 27% predicting they'll be better off a year from now, against 13% who expect to be worse off in early 2010.
This was an improvement from the previous tally in December, when only 20% expected to be better off and 18% had a pessimistic one-year outlook.
The proportion saying now is a good time for a major purchase rose to 41% this month from 35% in December.
The Bank of Canada said on Monday it will start to accept corporate bonds as collateral in an effort to loosen up credit amid the ongoing financial crisis.
The Canadian dollar was up .06 cents to 79.94 cents U.S.
BAYSTREET
All 13 TSX sub-groups were in negative territory, energy sliding 5.3%, industrials 4.6%, financials 3.7%. No group even tried to lighten the mood.
The TSX Venture Exchange lost 13.96 points to 878.94 while the NASDAQ Canada index darkened 16.70 points, to 394.88
ON WALLSTREET
The Dow Jones industrials index lost 250.89 points Monday to 7,114.78, ending at the lowest point since May 7, 1997.
The Standard & Poor's 500 index slumped 26.72 points to 743.33, a gully it hadn't seen since April 11, 1997, while the NASDAQ composite index fell 53.51 points to 1,387.72, closing at the lowest points since Nov. 20, 2008.
Stocks had gained in the morning on enthusiasm that the government may boost its stake in Citigroup, briefly assuaging fears that the troubled bank would have to be nationalized. But the early advance quickly petered out, as the worries of the last few weeks returned.
The Treasury Department, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and the Federal Reserve jointly issued a statement saying they will do all they can to shore up the struggling banking system.
The regulators also said they will launch a revamped program to inject fresh capital into financial institutions this week.
The Wall Street Journal reported that Citigroup is negotiating with government officials to have the U.S. boost its stake in the bank to as much as 40%.
The Journal, which said Citigroup made the proposal to its regulators, noted that sources say executives would prefer to keep the government's stake closer to 25%. Citi shares gained 10%.
Meanwhile, the Treasury is also considering its options as General Motors and Chrysler continue to flounder, despite having received billions in federal aid. According to a Wall Street Journal report Monday, the administration believes the possibility of Chapter 11 bankruptcy filings by the two companies must be seriously considered. GM shares gained 5%.
Fellow automaker Ford Motor has reached a tentative deal with its union on changed to retiree health care benefits, considered to be a critical concession on the part of the UAW. Shares rallied 10%.
Elsewhere on the economic front, a survey of 47 leading economists by The National Association of Business Economists finds that the recession will deepen before a turnaround begins later this year, projecting stronger-than-average gross domestic product growth in 2010.
The group, which officially determined that the nation entered recession in December 2007, said Monday that the economists see a 5% decline in GDP this quarter and a 1.7% drop in the second quarter.
But a pickup will begin in the second half, and growth of 3.1% is seen next year, the economists predict.
Treasury prices were little changed, with the yield on the benchmark 10-year note holding at 2.79% from Friday. Treasury prices and yields move in opposite directions.
U.S. light crude oil for April delivery fell $1.59 to settle at $38.44 U.S. a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery fell $7.20 to settle at $995 U.S. an ounce.