Canadian Stock Market Drops Amid European Debt Crisis Concerns

Strategic Insights -

The Canadian stock market experienced a decline on Tuesday as rising oil prices were offset by unfavorable data from Europe's biggest economy. The S&P/TSX Composite Index fell 147.95 points, or 1.24 percent, to 11,759.94, while the S&P/TSX Venture Composite Index slid 32.49 points, or 2.18 percent, to 1,458.43. The initial optimism over a European Union deal to tackle the debt crisis faded as analysts expressed concerns over the lack of tools to deal with short-term issues.

Key Takeaways:

  • The Canadian stock market dropped 147.95 points, or 1.24 percent, to 11,759.94 in the S&P/TSX Composite Index.
  • The S&P/TSX Venture Composite Index fell 32.49 points, or 2.18 percent, to 1,458.43.
  • Analysts expressed concerns over the lack of tools to deal with short-term issues in the European Union deal.
  • Rating agencies Moody's and Fitch downgraded the deal, stating it would not materially address the debt loads of some countries or their rising borrowing costs.
  • Moody's reviewed all EU governments' ratings for possible downgrades in early 2012.
  • Analysts worried about France, a major contributor to the European Financial Stability Facility, as a downgrade of its triple-A rating could affect its ability to fulfill commitments to the fund.
  • Investors awaited the response from rival agency Standard & Poor's, which warned of possible downgrades for most euro zone economies, including Germany.
  • The base metals and mining sector was down more than 5 percent on the Toronto Stock Exchange, with Ivanhoe Mines tumbling over 18 percent after Rio Tinto was successful in its arbitration challenge.
  • Energy stocks also slid 1.22 percent, outweighing the spike in oil prices.
  • Sino-Forest Corp., a troubled Chinese timberland owner, announced it would not make a 9.8-million U.S. dollar interest payment and would miss deadlines for releasing its third-quarter results and a report on fraud allegations.
  • The Canadian dollar failed to respond to higher crude prices, dumping 0.68 cents to 96.72 U.S. cents.

Statistics:

  • The S&P/TSX Composite Index fell 147.95 points (1.24 percent) to 11,759.94.
  • The S&P/TSX Venture Composite Index declined 32.49 points (2.18 percent) to 1,458.43.
  • March copper fell two cents (0.58 percent) to 3.44 U.S. dollars a pound.
  • Ivanhoe Mines lost over 18 percent.
  • Teck Resources fell 1.13 dollars (3.14 percent) to 35.52 Canadian dollars.
  • First Quantum Minerals dropped to 19.69 Canadian dollars.
  • Kinross Gold Corp. slid 0.52 cents (0.004 percent) to 12.52 Canadian dollars.
  • Oil prices spiked with the January crude oil contract on the New York Mercantile Exchange ahead 2.28 dollars (2.3 percent) to 100.05 U.S. dollars a barrel.
  • The Canadian dollar dumped 0.68 cents (0.7 percent) to 96.72 U.S. cents.

Sources:

  • XINHUA NEWS AGENCY