The Toronto stock market was lower Wednesday as a partial U.S. government shutdown continued for a second day with no sign of a resolution to Washington’s political impasse.
Traders also worried about how the stalemate between President Barack Obama and some members of the Republican party will impact negotiations over raising the U.S. government’s debt ceiling in mid-October.
The S&P/TSX composite index dropped 38.37 points to 12,809.07 with the gold sector the only advancer as bullion started to appear attractive as a safe haven investment.
The Canadian dollar was down 0.16 of a cent to 96.69 cents US.
U.S. indexes were negative as the Dow Jones industrials fell 100.09 points to 15,091.61, the Nasdaq lost 17.88 points to 3,800.1 and the S&P 500 index shed 10.2 points to 1,684.8.
Also pressuring indexes was a report from payroll firm ADP that the U.S. private sector created 166,000 jobs last month, lower than the 178,000 that had been expected.
That’s likely all the jobs data that traders will get this week as one of the spinoff effects of the government showdown is an absence of government data that usually moves markets. The Labor Department said Tuesday it won’t be issuing its employment report for September on Friday.
Market reaction to the partial government shutdown that started Tuesday has been relatively muted on hopes that economic damage from the budgetary impasse wouldn’t be too severe as long as it didn’t last too long.
But there is growing dismay that the standoff on Capitol Hill shows no signs of easing with some lawmakers in both parties suggesting the shutdown might last for weeks.
Adding to the grim mood is a deadline of Oct. 17 when the U.S. hits its debt limit and starts to run out of money to pay bills.
“Given the U.S. government shutdown and fast-approaching debt limit deadline, volatility with a negative bias looks the likely mix for markets in days ahead,” said a commentary from Barclays Research.
Meanwhile, Italian premier Enrico Letta has won a confidence vote in the Senate after Silvio Berlusconi delivered an about-face and announced he would support the government.
The actual voting was anticlimactic after the former premier acknowledged defeat and said he would support Letta after defections in his party robbed him of the backing he needed to bring down the government.
The tech sector was the biggest percentage decliner, down 0.65 per cent as The Globe and Mail reported that BlackBerry (TSX:BB) (Nasdaq:BBRY) is looking at tapping the value of its extensive real estate holdings in the Waterloo, Ont.-area to raise cash. It said that BlackBerry has asked for ideas to generate the largest possible return from its real estate in as little time as possible, through a confidential process begun last week. Its shares fell 16 cents to $8.03.
Commodity prices were mixed and the energy sector was down 0.55 per cent while the November crude contract on the New York Mercantile Exchange dipped 40 cents to $101.64 (US) a barrel. Cenovus Energy (TSX:CVE) declined 34 cents to $30.47 (Canadian).
The financials sector fell 0.5 per cent as Sun Life Financial (TSX:SLF) gave back 36 cents to $32.76.
The base metals sector eased 0.15 per cent with December copper up a cent to $3.28 a pound. HudBay Minerals (TSX:HBM) shed nine cents to $8.25.
The gold sector rose two per cent and December bullion gained $15.10 to $1,301.20 an ounce. Barrick Gold Corp. (TSX:ABX) advanced 47 cents to $19.07.
In other corporate news, TransCanada Corp. (TSX:TRP) has acquired two additional solar power facilities in Ontario as part of a multi-year agreement with Canadian Solar Solutions. TransCanada didn’t disclose the cost of the individual plants but Canadian Solar says they’re valued at more than $95-million. TransCanada shares dropped 23 cents to $44.97.
European bourses were also lower while the European Central Bank kept its key interest rate at a record low 0.5 per cent, holding off on more stimulus for the economy of the 17-member euro currency union as it monitors the tentative recovery.
London’s FTSE 100 index lost 0.51 per cent, Frankfurt’s DAX declined 0.37 per cent while the Paris CAC 40 was down 0.47 per cent.
Earlier in Asia, Hong Kong’s Hang Seng rose 0.6 per cent, reopening after a one-day public holiday while South Korea’s Kospi rose marginally. Markets in mainland China were closed for a public holiday.
However, Japan’s Nikkei 225 index fell 2.2 per cent after the government Tuesday announced it would go ahead with a sales tax increase in April.