TSX dips on nagging eurozone fears
The Toronto stock market closed in the red Thursday as growing uncertainty about the future of the eurozone discouraged buyers.
There was also caution ahead of Greek elections Sunday.
The S&P/TSX composite index edged 31.45 points lower to 11,466.42, with traders also focused on Spain and Italy as the two countries felt the pressure of higher borrowing costs.
“I don’t think anybody is feeling strongly bullish by any means,” said Sadiq Adatia, chief investment officer at Sun Life Global Investment. “People want to see what the situation looks like in Greece with the election and it’s a wait and see approach here.”
The TSX Venture Exchange gained 8.45 points to 1,252.33. The Canadian dollar was up US0.52¢ to US97.68¢.
U.S. markets were positive on hopes that the Federal Reserve could signal the possibility of another round of economic stimulus at its meeting next week and rumours that eurozone officials are preparing coordinated action to deal with the region’s banking crisis.
The Dow Jones industrial average jumped 155.53 points to 12,651.91.
The Nasdaq composite index gained 17.72 points to 2,836.33 and the S&P 500 index climbed 14.22 points to 1,329.1.
Greeks will determine whether the country sticks to its highly unpopular austerity program of tax hikes and spending cuts that a previous government accepted to receive billions of euros in bailouts that are keeping the country afloat. If political parties are elected that renege on the program, the bailout and Greece’s membership in the euro union would be at risk.
Meanwhile, Athens’ main stock index closed a stunning 10.1% higher, with banking shares up a collective 23.6%.
Spain’s 10-year borrowing rate inched up to 6.96% in intraday trading from 6.67%. That is close to the 7% rate considered unsustainable. Greece, Portugal and Ireland were forced to seek financial rescue packages after rising to that level.
Ratings agency Moody’s downgraded Spain’s government debt three notches late Wednesday, placing it one level above junk status. Moody’s said the downgrade was due to the offer from eurozone leaders of up to ¤100-billion to Spain to prop up its failing banking sector, which the ratings agency believes will add considerably to the government’s debt burden.
The TSX gold sector was down about 0.4% as August gold edged up 20¢ to US$1,618.40 an ounce. Goldcorp Inc. faded 66¢ to C$40.57. The financials sector dipped 0.4%, with Manulife Financial shedding 20¢ to $10.57.