TXS LOSES 2012 GAINS AFTER DISMAL WEEK
At the end of a dismal three days of trading on Friday, Canada’s benchmark stock index had not only fallen 3% for the week, it had wiped out all of its gains for the year, closing 0.70% below its finish on Dec. 30.
The three-day slide started with disappointing U.S. private-sector job figures and ended with a disappointing employment report from the U.S. Labor Department — with uncertainty over Europe’s economic recovery filling out the middle.
On Friday the S&P/TSX composite index closed at 11,871.23, a loss of 143.66 points, or 1.20%. Eight of the 10 sub-indexes declined, led by energy, which lost 2.25% as the price of crude oil plunged US$4.05 to US$98.49 a barrel. The price of gold gained US$10.40 to US$1,645.20 an ounce.
“Equity markets struggled this week, as evidence continued to mount that the U.S. economy has cooled since the turn of the year,” BMO Capital Markets economist Robert Kavcic said in an afternoon note.
“After roaring like a lion into 2012, the economic data have spent the spring acting more like a lamb, taking some steam out of the equity market rally. Meantime, the TSX was up to its old tricks, underperforming with a 3% decline this week, as all 10 major sectors were in the red. Canadian stocks are now down 0.7% in 2012, the worst performing index on the global major market leaderboard — worse than France, which will see political drama play out this weekend; and the U.K., which has stumbled into a double-dip recession.”
The political drama playing out i n France this weekend is a presidential election run-off in which Socialist candidate Francois Hollande is expected to defeat incumbent President Nicolas Sarkozy. A win by Hollande is seen as a threat to the austerity measures agreed to by EU leaders as a way to stem the eurozone debt crisis, but which have ended up pushing the region back into recession. Meanwhile, Greece holds parliamentary elections on Sunday.
“The results may ... send a signal about the public mood toward austerity and with the challenger in France having promised to renegotiate last December’s fiscal agreement, we could see a shift in focus toward a search for alternatives to austerity for climbing out of the eurozone’s current fiscal and economic mess,” says analyst Colin Cieszynski of CMC Markets.
The Canadian dollar lost 67 basis points, closing at US$1.0045.
The Dow Jones industrial average fell 168.32 points, or 1.27%, to 13,038.27 after Labour Department figures showed the economy created fewer jobs in April than expected. The Nasdaq lost 67.96 points, or 2.25%, to 2,956.34. Canada’s junior Venture exchange slipped 11.43 points, or 0.81%, to 1,405.10.
Postmedia News