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Commodity-producing countries looked like outcasts on Wednesday, judging from the sudden disdain for stock markets in Canada and Brazil – even as most commodities held up reasonably well.
The S&P/TSX composite index closed at 14,034.11, down 432.92 points, or 3 per cent – its biggest one-day dip since March. The decline erased most of what was left of the Canadian index's gains in 2008, leaving it up just 1.5 per cent for the year.
No subindex was spared from the selloff, but materials and energy bore the brunt, falling 4.8 per cent and 3 per cent, respectively. In a rare diversion from stocks, crude oil rose to $143.57 (U.S.) a barrel, up $2.60, and gold rose to $946.50 an ounce, up $2 – suggesting either a technical pullback or a growing belief among investors that global consumption is about to get whacked, especially with U.S. car manufacturers on the ropes.
The two biggest movers on the index were Potash Corp. of Saskatchewan Inc., down 8.4 per cent and Suncor Energy Inc., down 4.8 per cent – the two stocks accounting for more than 90 points, or about 20 per cent, of the index's losses.
Adding to the mess, financials fell 2.1 per cent and Research In Motion Ltd. erased a 5 per cent gain earlier in the day, closing down 1.8 per cent. It marked the BlackBerry maker's eighth consecutive losing day.
Brazil's Bovespa index – similarly heavily weighted toward commodity producers – fell 3.5 per cent.
By comparison, the losses dealt to major U.S. indexes look mild. The Dow Jones industrial average closed at 11,215.51, down 166.75 points, or 1.5 per cent, putting it squarely in bear market territory. The S&P 500 closed at 1261.52, down 23.39 points, or 1.8 per cent.
In the United States, the declines were relatively easy to justify: A report from Merrill Lynch suggested that a General Motors Corp. bankruptcy is no longer outside the realm of possibilities, an amazing development for a company that once ruled the U.S. economy.
Investors appeared to take the suggestion to heart as the day progressed, driving GM's shares below $10. They closed at $9.98, down 15.1 per cent, the lowest close since 1954.
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FOODY FOODY FOREVER from Canada writes: Twenty years ago Magna shares hit this low Its time to invest in more GM shares recommend buy lots make money...
- Posted 02/07/08 at 8:20 PM EDT | Alert an Editor | Link to Comment
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Gerry H from Vancouver, Canada writes: Invest in GM? I like my money to have a chance.
If GM was on track to recover I'd agree, but what product do they have? I se nothing for me.
I've looked at their hybrids, no way. The Malibu hybrid saves little, the Vue hybrid doesn't even have a spare tire.
The quickly rising gas prices have passed them by.
Yet Toyota drops the price of their well selling Prius hybrid.
Nasty Toyota, that's hitting them when they're down.
Perhaps GM can get one of those banks in trouble to lend them more of our money. Our Gov. will guarantee it's return, by taxing us a bit more.- Posted 02/07/08 at 8:54 PM EDT | Alert an Editor | Link to Comment
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Red-necked and loving it from Canada writes: Merrill Lynch, a company with one foot in the bankruptcy grave itself, hits on GM and people actually believe it. They will go bankrupt before GM and this "revelation" was just to buy time for themselves - to take the scrutiny off.
- Posted 02/07/08 at 9:45 PM EDT | Alert an Editor | Link to Comment
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