Sign in Subscribe
Financial markets

Canadian and US Markets Suffer Amid Economic Concerns

Strategic Insights

— 2 min read

Market analysts attribute the decline in Canadian and US bond prices, leading to a negative impact on the stock markets in New York and Toronto. The New York Dow Jones industrial average fell 12.61 points to 3,755.91, while the Toronto Stock Exchange composite index closed off 16.86 points at 4,252.10. The economic concerns are driven by the US economic recovery, which is casting uncertainty among investors. Analysts are divided, with some being cautious about the impact of Canadian politics on the market, while others remain bullish on the Canadian market, expecting Toronto to follow a recovering New York market.

Key Takeaways:

  • The Dow Jones industrial average in New York slid 12.61 points to 3,755.91, with economically sensitive issues such as Caterpillar, Aluminum Co. of America, Chrysler, and International Paper experiencing significant losses.
  • The Toronto Stock Exchange composite index closed off 16.86 points at 4,252.10, with the broader market weakening due to concerns about the US economic recovery.
  • Cyclical issues in the Dow Jones industrial average lost ground, leading to a decline in the 30 blue chip issues that make up the index.
  • Rose Putinski, chief economist at the Investment Dealers Association of Canada, noted that the market is highly dependent on the US economy and that any weakness in the US will have a negative impact on the Canadian market.
  • Analysts point to the widening spreads against US issues in the Canadian bond market as a sign of economic concern.
  • Clement Gignac, chief economist and strategist for Levesque Beaubien Geoffrion Inc., remains bullish on the Canadian market, expecting Toronto to follow a recovering New York market over the mid-June to early August period.
  • Mr. Gignac identifies Canada and Australia as plays on a recovering global economy, citing improvements in corporate profits and a large resource sector.
  • The only Toronto sector showing strength was the real estate sector, while the only major decline was in consumer products, which dropped 1.17 per cent.

Statistics:

  • The Dow Jones industrial average fell 12.61 points to 3,755.91.
  • The Toronto Stock Exchange composite index closed off 16.86 points at 4,252.10.
  • The broader market on Wall Street weakened, with advancing issues trailing decliners 902 to 1,190.
  • Trading volume on the Toronto Stock Exchange reached a high of 93 million shares.
  • The Canadian bond market saw widening spreads against US issues.
  • Canadian Occidental Petroleum reported an increase in demand for war-risk insurance premiums from shipping companies due to the civil war in Yemen.

Sources:

  • "Bond prices under pressure again in Canada and the United States" by Angela Barnes, Markets Reporter, date unknown.
  • The New York Stock Exchange, "Odd-lot trades made Monday through the New York Stock Exchange: Customer purchases 801,061; Short sales 48,596; Other sales 1,109,255; Total sales 1,157,851"
  • The Toronto Stock Exchange, "Composite index slid 16.86 points to 4,252.10"
  • Levesque Beaubien Geoffrion Inc., statement by Clement Gignac, chief economist and strategist, date unknown.
  • Organization for Economic Co-operation and Development, "Newly released economic forecast"

Read more