TSX plunges 487 points
Canada’s September stock-market rout intensified yesterday as crumbling oil prices punctured energy stocks and helped put the country’s main stock index on the cusp of a bear market.
The S&P/TSX Composite Index nose-dived 487.88 points or 3.86 per cent to 12,146.76.
The benchmark has plummeted nearly 12 per cent this month and 19.4 per cent since its June 18 peak. A bear market is often defined as a 20 per cent drop from the peak.
It was the sixth-straight losing session for the commodity —weighted TSX, pushing the past week’s decline to more than 1,600 points. Oil prices and a sharp drop in mining stocks were behind the latest tumble.
OPEC oil ministers agreed today to curb overproduction by more than 500,000 barrels a day, in a compromise meant to avoid new turmoil in crude markets while seeking to prevent prices from falling too far. Ahead of the decision, benchmark crude for October delivery fell US$3.08 to settle at US$103.26 on the New York Mercantile Exchange, the lowest settlement price since April 1.
Prices in after-market trading tumbled more than $4 a barrel to a new five-month low of $101.74.
Weakening oil and commodity prices also helped push down Canada’s currency by more than half a cent against the U.S. dollar.
"The sentiment is obviously just completely working against the market right now and no one wants to touch commodities," said Gareth Watson, Canadian equity adviser at Scotia Capital.
"You have now more and more evidence coming out on a daily basis how other places other than the U.S. are slowing down," Watson added.
New York markets also soured, wiping out Monday’s gains netted after the announcement that the U.S. government is taking over mortgage giants Fannie Mae and Freddie Mac as fresh worries about the stability of investment bank Lehman Brothers sparked jitters about the overall financial sector.
The Dow Jones industrial average fell 280.01 points to 11,230.73, while the Nasdaq composite index was down 59.95 points to 2,209.81.
The S&P 500 index dropped 43.28 points to 1,224.51.
The TSX Venture Exchange was 150.37 points lower to 1,621.26 and the Canadian dollar declined 0.51 of a cent to 93.41 cents (U.S.)
The Toronto Stock Exchange has sustained severe losses over the past week that have carved 1,624 points, or 11.8 per cent from the main index, led by oil and materials stocks that make up about half of the Toronto stock market.
The Toronto market is down 19.4 per cent from its most recent high of 15,023 on June 18, when demand for Canadian commodities seemed unstoppable.
Big losers in the energy sector included EnCana Corp., which dropped $3.86 (Canadian), or 5.44 per cent, to $67.10, and Suncor Energy, which shed $3.49 or 7.1 per cent, to close at $45.67.
The gold sector dropped 8.8 per cent as the December bullion contract on the Nymex fell $10.50 to $792 (U.S.) an ounce bad credit payday loan.
Goldcorp faded $2.36 or 8 per cent to $26.94 (Canadian).
The base-metals sector, the biggest decliner on the index, stepped back 7.5 per cent.
TSX heavyweight Potash Corp. fell $12.23 or 7.5 per cent to $150.27.
The TSX financial sector had provided early support but later moved down 1.15 per cent as Royal Bank dipped 70 cents to $47.90 and CIBC moved down 92 cents to $63.50.
Lehman Brothers shares fell 44.4 per cent to $7.87 on speculation that an investment from South Korea’s government-owned Korea Development Bank remained in doubt.
From Star staff and wire services
Filed under: news by Pascal