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U.S. Senate Majority Leader Sen. Harry Reid (D-NV) speaks during a news conference July 30, 2011 on Capitol Hill in Washington, D.C. (Alex Wong/Getty Images)
U.S. Senate Majority Leader Sen. Harry Reid (D-NV) speaks during a news conference July 30, 2011 on Capitol Hill in Washington, D.C. (Alex Wong/Getty Images)

At midday: ‘Fiscal cliff’ pessimism sends stocks lower Add to ...

The Toronto stock market was lower Thursday after a top U.S. lawmaker delivered a pessimistic assessment of talks aimed at stopping the U.S. from going over the so-called “fiscal cliff.”

That’s the name for the double-whammy of steep tax increases and spending cuts set to click in at the beginning of 2013. The combination would erode already weak U.S. economic growth and likely send the economy back into recession, taking trading partners down along with it.

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The S&P/TSX composite index was down 25.53 points to 12,345.27 with losses led by energy and financial companies while the TSX Venture Exchange gained 2.23 points to 1,187.83.

The Canadian dollar was off 0.23 of a cent to 100.65 cents (U.S.).

Losses on U.S. markets deepened after after Senate Majority Leader Harry Reid said the government appears headed over the fiscal cliff because of a lack of progress in negotiations between Republicans who control the House of Representatives and Democrats who control the Senate and White House.

Reid said it is up to congressional Republicans to come up with a plan that both houses would pass and President Barack Obama would sign.

“At the end of the day, this prevailing will-they-or-won’t they in Washington is causing a dip,” said Craig Fehr, Canadian markets specialist at Edward Jones in St. Louis.

“But it’s tough to read too much into anything given that volumes are exceptionally low. All the players aren’t in the game so to speak.”

The Dow Jones industrials lost 72.1 points to 13,042.49 as data showed fiscal cliff worries are spreading to consumers.

The Conference Board said that its consumer confidence index fell this month to 65.1, down from 71.5 in November. That’s a second straight decline and the lowest level since August.

The survey showed consumers are slightly more optimistic about current business conditions and hiring. But their outlook for the next six months deteriorated to its lowest level since 2011 The Nasdaq composite index fell 14.01 points to 2,976.14 and the S&P 500 index declined 8.45 points to 1,411.38.

Other data showed that the average number of Americans seeking unemployment benefits over the past month fell to the lowest level since March 2008 last week.

The Labour Department said Thursday that weekly applications dropped 12,000 to a seasonally adjusted 350,000 in the week ended Dec. 22. The four-week average, a less volatile measure, fell to a nearly five-year low of 356,750.

Still, the figures were affected by the Christmas holiday. A department spokesman said many state unemployment offices were closed Monday and Tuesday and unable to compile complete data.

And the Commerce Department said that sales of new homes rose 4.4 per cent in November to a seasonally adjusted annual rate of 377,000. That’s the strongest pace since April 2010.

New home sales have increased 15.3 per cent in the past year.

Financials lost 0.65 per cent as Sun Life Financial lost 43 cents to $26.18 while TD Bank declined 89 cents to $83.10.

Commodities were mixed with the February crude contract on the New York Mercantile Exchange down nine cents to $90.89 (U.S.) a barrel. The energy sector lost 0.5 per cent while Canadian Natural Resources fell 36 cents to $28.53 (Canadian).

A major TSX loser was Poseidon Concepts Corp. which plunged almost 60 per cent after the oilfield service company suspended its dividend, replaced its CEO and initiated a board review of the management and business processes. Poseidon shares were down $1.91 or 57.7 per cent at $1.40 on the Toronto Stock Exchange after the company said it has established a special committee of the board to review the recent write-off of certain accounts owing to it.

Support came from the base metals sector, which rose 0.5 per cent with March copper up a penny at $3.61 (U.S.) a pound after rising five cents Wednesday. The gain, the largest in four weeks, came after workers rejected a wage proposal at BHP Billiton’s Escondida mine in Chile. Turquoise Hill Resources gained 22 cents to $7.27.

The gold sector rose 0.77 per cent with February bullion up $3.30 to $1,664 (U.S.) an ounce. Iamgold Corp. was ahead 29 cents to $11.24.

The tech sector also provided lift with Research In Motion Ltd. up $1.14 or 10.95 per cent to $11.65, mirroring an 11 per cent gain on U.S. markets on Wednesday. RIM stock plunged about 25 per cent last week as analysts raised concerns about less revenue from the lucrative service fees charged by the company to use its secure network. The stock had been on a roll during December on rising optimism about the new BlackBerry 10 lineup which is being launched at the end of January.

Tokyo’s benchmark Nikkei 225 index rose 0.9 per cent to close at its highest finish since March 2011. That added to Wednesday’s 1.5 per cent gain and took the Nikkei to a 22 per cent increase for the year. Hong Kong’s Hang Seng gained 0.4 per cent. South Korea’s Kospi added nearly 0.3 per cent. Benchmarks in Singapore, Taiwan and Australia also posted gains.

In China, shares lost ground, with the Shanghai Composite Index falling 0.6 per cent while the Shenzhen Composite Index lost 0.8 per cent.

European bourses were mixed after Germany’s finance minister said the worst of euro area’s debt crisis appears to be over after three years of worries over Greece and other members of the group of 17 European Union countries that use the single currency.

London’s FTSE 100 index ahead 0.14 per cent, Frankfurt’s DAX gained 0.29 per cent while the Paris CAC 40 was up 0.67 per cent.

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Security Price Change
TSX-I S&P/TSX Composite 15,446.55 1.33
0.009 %
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