October 8, 2008
Benchmark Toronto index still down 3,200 points since Labour Day
The Toronto stock market broke a five-day losing streak in a wild up-and-down session Wednesday as traders reacted to efforts by central banks to cut interest rates.
The S&P/TSX composite index, which had opened down 309 points, closed up 225.84 points, or 2.3 per cent, at 10,055.39.
The index, which fell below 10,000 on Monday for the first time since 2005, has lost about 3,200 points, or 23 per cent of its value, since Labour Day.
The day did not end happily in New York, where the Dow Jones industrial average closed down 189.01 points, or two per cent, at 9.258.10. It had been up more than 145 points mid-afternoon.
In the background was a co-ordinated move by central banks, including the Bank of Canada and the U.S. Federal Reserve, to cut short-term interest rates by half a percentage point in hopes of preventing a financial crisis from sending their economies into a deeper slump.
U.S. Treasury Secretary Henry Paulson called for patience, insisting that the Bush administration was moving ahead quickly to implement its $700-billion US bailout package. But he predicted that some banks will still fail despite the rescue package, saying that “the turmoil will not end quickly and significant challenges remain ahead.”
On the Toronto market, Halifax-based Clearwater Seafoods Income Fund saw its unit price drop $1.58 to $2.72 after the collapse of Iceland’s Glitnir Bank upset plans to take the fund private at $4.50 a unit. Glitnir was to have provided some of the financing.
Clearwater CEO Colin MacDonald said the bank’s problems came as a surprise.
“I think things have to sort themselves out,” he told CBC News. “There’s a lot of changes taking place, a lot of gyrations going on underneath the covers that we’re not aware of.”
Gold stocks, often seen as a haven in times of financial uncertainty, were leading the way in Toronto. Barrick Gold was up $6.38 to $40.05. Goldcorp was up about $5.77 to $34.60.
The precious metal itself was up $26.60 to $905 US an ounce in New York trading.
In Toronto, fertilizer giant PotashCorp was up $13.58 to $110.50 after being pounded last week when an analyst pulled a “buy” recommendation.
BlackBerry maker Research In Motion was up $3.26 to $64.19 after falling $40 in less than two weeks when its earnings failed to meet high expectations.
The price of oil was still drifting lower, a sign of fear that economic troubles will reduce demand. Light sweet crude for November delivery fetched $88.61 US a barrel, down from just over $90 Tuesday, in late New York trading.
The Canadian dollar – briefly worth more than $1.10 US last year – was trading at about 89 cents US, down from more than 90 cents on Tuesday.
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