North American stock markets opened sharply lower, discouraged by U.S. elections Tuesday that did little to alleviate concerns over the looming "fiscal cliff" given a still fractured U.S. Congress. More signs of weakness in the European economy today are also weighing on sentiment.
In early trading, the S&P/TSX index was down 90 points, or 0.7 per cent, at 12,271; the S&P 500 was down 22 points, or 1.5 per cent, at 1,406; and the Dow Jones industrial average was down 209 points, or 1.5 per cent, at 13,036. Crude oil is down $2.23, or 2.5 per cent, at $86.48 (U.S.), but gold is acting somewhat as a haven, gaining $5.80 to $1,720 (U.S.).
On the TSX, the sell-off was broadly based, with almost all sectors posting losses, led by energy, which was down nearly 1 per cent. A Mitt Romney win would have likely been more favourable for some energy stocks, given he had planned to open up more land to exploration and development. Coal stocks are particularly hard hit, as Barack Obama's push against fossil fuels looks set to continue. Teck Resources was down 1.9 per cent at $32.88. Peabody Coal and Alpha Natural Resources were both down close to 10 per cent.
Markets were volatile overnight, with initial gains in Asia and Europe subsiding as the opening of North American markets neared.
While market players may have been initially encouraged by the assurance that an Obama presidential win will keep the Federal Reserve's highly aggressive economic stimulus policy intact, they aren't comforted by the Democrats holding onto their majority in the Senate while the Republicans continue to control the House of Representatives. This could lead to a logjam in policy making, which is particularly a concern ahead of the $600-billion (U.S.) of automatic tax increases and spending cuts that are scheduled to kick in at the end of this year, the so-called "fiscal cliff."
Meanwhile, Europe is continuing to worry market participants. The European Union today downgraded its economic forecasts, now expecting the gross domestic product of the 27-country region to contract by 0.3 per cent on an annual basis this year, rather than remaining flat as it predicted in the spring. It also said that the 17 countries that use the euro will see their GDP fall 0.4 per cent. Its previous expectation was for a 0.3 per cent contraction.
European Central Bank President Mario Draghi didn't provide much encouragement this morning either, stating that the bank expects the euro zone economy to remain weak "in the near term." He urged euro zone governments to press ahead with efforts to forge closer financial, fiscal, economic and political ties.
A main focus now is on Greece, where its parliament today is voting on austerity measures needed to keep a European bailout on track.
There are no key U.S. or Canadian economy figures out today, but there are many earnings reports. Here's a recap of some of the bigger names to report so far:
Bombardier Inc. said it would delay by about six months the first flight of its C-Series jetliner and cut about 1,200 jobs in its train manufacturing division. It also reported a 6 per cent drop in revenue and said it would close a freight car plant in Aachen, Germany, and said it would record a restructuring charge of not more than $150 million in the current quarter. Its shares are down 3 per cent at $3.50 at the open.
WestJet profits soared almost 80 per cent in the third quarter as the Calgary-based airline got lift from revenues that were up almost 12 per cent. Shares are up 1.6 per cent.
Agrium Inc. reported adjusted profit of $1.34 per share, below a consensus analyst estimate of $1.76 per share. Shares are down about 7 per cent at the open.
Enbridge Inc. improved its third-quarter profit over the same period last year but the Calgary-based pipeline company’s adjusted earnings fell just short of analyst estimates.
Time Warner said its third-quarter earnings grew 2 per cent as it reaffirmed its 2012 full-year business outlook.
Kraft Foods Group Inc. says it net income rose 13 per cent in the third quarter, as brands including Oscar Mayer and Philadelphia cream cheese drove sales and helped the company top Wall Street expectations.
Macy’s Inc. reported a higher-than-expected third-quarter profit, helped by sales gains, and raised its full-year profit outlook despite powerful storm Sandy disrupting the lives of shoppers.