North American stocks opened on a sour note, but quickly bounced off their lows in the first half hour of trading. Worries about the pending end-of-year tax increases and spending cuts in the U.S., as well as the lack of progress in resolving the euro zone debt crisis, is denting sentiment once again today.
In early trading, the S&P/TSX index was down 30 points at 12,160; the S&P 500 was nearly unchanged at 1,380; and the Nasdaq was down 8 points at 2,896. Major commodities were also lower, with oil off 39 cents at $85.18 (U.S.) and gold down $7 at $1,723.90.
A clash between Greece's international lenders over how the country can bring its debts down to a sustainable level has reignited fears that the European crisis could flare up again. Euro zone finance ministers this week suggested that Athens should be given until 2022 to lower its debt/GDP ratio to 120 per cent, but International Monetary Fund chief Christine Lagarde insisted the existing target of 2020 should remain.
Also in Europe overnight, German investor confidence unexpectedly declined, according to a November reading from the ZEW Center for European Economic Research. Its index of investor and analyst expectations fell to minus 15.7 from minus 11.5 in October
Meanwhile, the uncertainty over whether Washington can reach a quick agreement to keep $607-billion (U.S.) in tax increases and spending cuts from taking effect at the start of 2013, the so-called "fiscal cliff," continues to keep would-be buyers out of the stock markets. Since President Barack Obama was re-elected on Nov. 6, more than $1-trillion has been erased from the value of equities worldwide, according to Bloomberg data. The U.S. elections kept Congress divided between Republicans and Democrats, making it difficult for legislation to get passed.
The Canadian dollar is also under pressure this morning, as currency players stand by to see what Canadian Finance Minister Jim Flaherty has to say in his fiscal update later today. He may project a deficit that's a little higher than the original budget forecast and is likely to discuss the risks of the "fiscal cliff" on the Canadian economy. The loonie is trading below parity, down about one-third of a cent at 0.9966 (U.S.)
Here's a look at some of the stocks moving on news this morning:
Quebecor Inc. said net income was down to $18.6-million or 30 cents per share compared to $26.1-million or 41 cents per share in the same period last year. Its shares are up 0.6 per cent at the open.
Sears Canada Inc. reduced its net loss in the third quarter to $21.9-million, about half what the department store chain racked up last year. But its shares are down 5.3 per cent at the open.
Home Depot said net earnings rose to 63 cents per share in the third quarter from 60 cents per share a year earlier, beating expectations. It also raised its outlook for the year. Its shares are up 2.8 per cent at the open.
Shoppers Drug Mart Corp. saw its third-quarter net profit slip as it took a $13-million restructuring charge. Its adjusted net earnings per share was 81 cents, in line with analyst estimates. Shares are up 0.5 per cent at the open.
BHP Billiton Ltd. has agreed to sell its diamonds business to Canadian diamond miner and retailer Harry Winston Diamond Ltd. For $500 million (U.S.). The assets include BHPs interests in the EKATI Diamond Mine and its diamonds marketing operations. Harry Winston shares are down 0.3 per cent in early trading.