Canada’s main stock index fell yesterday because of a slide in oil prices. Upcoming data is expected to show an increase in crude stockpiles. The energy group led all sectors lower with a 2.7% followed by a 2% drop by the financial group. The S&P/TSX composite index fell 1.22% a day after the big rally on Monday.
Stock markets did benefit from comments made by U.S. Federal Reserve Chairman Ben Bernanke who moved to reassure private investors participating in Washington’s plan to free banks of toxic assets. With no key Canadian data due for the rest of the week the TSX will follow U.S. stock markets, oil and commodity prices.
In the United States, Financial stocks led the decline after huge gains the day before. These were related to the Fed’s efforts to improve lending and the Treasury’s plan to remove toxic assets. Financial shares in the S&P 500 fell 6.5%, however, they are still up nearly 20% in March. The Dow Jones industrial average closed down 1.4%, the S&P 500 closed down about 2% and the Nasdaq closed down 2.4%.
Obama used a nationally televised news conference last night to try to sell America on his $3.55 trillion proposed budget and the bank bailout plan, and convince other countries to stimulate the global economy.
His economic message comes at a critical time:
1. His budget plan, which includes the main priorities of his entire term in office, is under fire not just from congressional Republicans but also some Democrats;
2. Americans are weary of billion dollar bailouts, particularly after the political firestorm or backlash over AIG’s $165 million bonuses last week; and
3. The Group of 20 Summit is next week.
He argued that it was critical to use the budget to address rising healthcare costs, to improve education and to spend money on clean energy policies. “That’s why this budget is inseparable from this economic recovery: because it is what lays the foundation for a secure and lasting prosperity,” he said. Focusing on the economy, Obama said, “We’ve put in place a comprehensive strategy designed to attack this crisis on all fronts. It’s a strategy to create jobs, to help responsible homeowners, to restart lending, and to grow our economy over the long-term. And we are beginning to see signs of progress.”
The administration has recently cited glimmers of improvement in the devastated housing market, but most key economic indicators remain in bad shape.
U.S. stock index futures pointed up after data showed new U.S. orders for long lasting manufactured goods unexpectedly rebounded in February. World stocks slipped and oil fell this morning after a weak German corporate sentiment survey and poor UK retail data raised concerns about the global economy. The Munich-based economic research institute said its business climate index, based on a monthly poll of around 7,000 firms, fell to 82.1 from 82.6 in February.
In Canada the stock index may open lower due to weakness in the price of crude & metals.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
