Small loss on day with little data
News of bad debt held by Spanish banks renews Eurozone worries
With little in the way of economic data to move the markets on Wednesday, influences on investor sentiment included an increase in the percentage of bad debts held by Spanish banks and disappointing earnings reports from two U.S. tech giants.
In Toronto, the benchmark S&P/TSX composite index fell by a modest 8.05 points, or 0.07 per cent, to 12,128.89. Only two of the 10 sub-sectors declined: materials, down 0.90 per cent, and energy, which fell 0.46 per cent.
The price of crude oil fell to $102.67 US a barrel, a drop of $1.53 US, while gold slipped $11.50 US to $1,638.80 US.
The Canadian dollar lost 11 basis points after gaining nearly a full cent the previous session, closing Wednesday at $1.0088 US.
Although the Canadian dollar tends to rise and fall with commodity prices, oil in particular, Bank of Canada governor Mark Carney said Wednesday that treating the loonie as a commodity currency could be a “recipe for losing money.” Delivering the central bank’s quarterly economic outlook on Wednesday, Carney said it is “simplistic” to talk about the dollar as a commodity currency, “let alone a currency that moves consistent with one commodity.”
Still, BMO Capital Markets deputy chief economist Douglas Porter notes that the charts tell a different story. “By at least one measure, commodity prices have accounted for 93 per cent of the move in the Canadian dollar in the past decade . . . leaving seven per cent for the non-simplistic to explain.”
Market movers on Wednesday included a report that bad debt held by Spanish banks grew between March and April, renewing fears of a Eurozone debt crisis. Also, IBM earnings came in well short of analysts’ expectations, while Intel Corp. forecast gross margins that disappointed analysts, weighing on U.S. markets.
The Dow Jones industrial average fell 82.79 points, or 0.63 per cent, to 13,032.75, while the Nasdaq composite slipped 11.37 points, or 0.37 per cent, to 3,031.45.
Canada’s junior Venture exchange closed at 1,411.82, a dip of 10.48 points, or 0.74 per cent.