TSX loses ground amid U.S. worries
The Toronto stock market closed modestly higher at the end of a volatile week amid a partial U.S. government shutdown that was in its fourth day Friday and an approaching deadline when the U.S. government hits its debt limit.
The S&P/TSX composite index was ahead 23.53 points to 12,758.65, led by beaten-down mining stocks, while the Canadian dollar was up 0.32 of a cent (U.S.) to 97.16 cents.
U.S. indexes turned higher as the Dow Jones industrials climbed 76.1 points to 15,072.58, the Nasdaq gained 33.41 points to 3,807.75 and the S&P 500 edged up 11.84 points to 1,690.5.
But for the week, North American markets ended lower amid fears that an Oct.17 deadline for raising the U.S. government’s debt ceiling could be more disruptive than the partial shutdown.
“I guess I take a simplistic view that it’s not in anyone’s interest, Republicans or Democrats, to be blamed for a default,” said Ian Nakamoto, director of research at 3MACS.
“There has to be some sort of resolution and like most resolutions, it will come at the very end. We could be in this see-saw pattern to the middle of October and there could be a couple of scary down days.”
The TSX shed 0.66 per cent and the Dow industrials fell1.22 per cent over the past week. Markets initially took the partial shutdown of non-essential government services well, with traders hoping it would be shortlived. But investor anxiety has risen as Republicans in the House of Representatives continue to insist on changes to so-called Obamacare while President Barack Obama refuses to consider any deal linking his signature health-care legislation to routine legislation needed to fund the government. The U.S. Treasury Department warned Thursday that a default could cause U.S. credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket. The tech sector was also weak with BlackBerry off nine cents at $7.88. The smartphone maker expects to receive a $500 million tax rebate within the next year. A major TSX gainer was Air Canada. Its shares shot up 52 cents, or 13.1 per cent, to $4.49 on very heavy volume of 10.3 million shares, rising to their highest price since the fall of 2008. The move came as analysts raised their price targets after the airline announced improved cost estimates. In other corporate news, Twitter Inc. has released its initial public offering documents ahead of a stock debut expected before American Thanksgiving in late November. It hopes to raise up to $1 billion in one of the year’s most eagerly awaited stock market debuts. They show Twitter’s annual revenue has soared from $28 million in 2010 to $317 million last year. Twitter gets 87 per cent of its revenue from advertising.