Index Daily Change
S&P/TSX composite index 1.68% Drop
Dow Jones industrial average 0.05% Gain
Standard & Poor’s 500 Index 0.11% Gain
Nasdaq Composite Index 0.31% Gain
The Canadian stock market fell for a 3rd straight day yesterday as oil and metal prices tumbled on concerns about Euro zone debt and weaker growth in China. In short, there is concern that the global economies, in particular China, are slowing down and investors extrapolate that into lower commodity prices.
China’s key stock index tumbled 5.07% to its lowest close in a year. That fall was led by property stocks, as retail investors fled the China stock market after a month-long decline sparked by a severe government clampdown on surging property prices.
Investor sentiment was also hurt by concern that efforts to tackle the Euro zone debt crisis could hurt the global economic recovery. You have slow economies in Europe and the U.S.
In the United States stocks staged a comeback in late trading as bargain hunters snapped up beaten-down shares, setting aside concerns that efforts to tackle the Euro-zone debt crisis could hurt the global economy.
Things got a little oversold and things were getting a little overdone on the downside recently.
The Euro slid to a 4-year low at one point before rebounding, helping take indexes down more than 1% earlier in the day as investors fretted that the steps some Euro-zone nations are taking to cut their budgets will hinder economic growth.
Adding to apprehension over the still fragile recovery, a gauge of manufacturing in New York state showed growth advanced at a slower pace in May, while a Chinese leading economic indicator showed the country’s growth may have already peaked.
Last week stocks were also volatile as stock appreciated in value early in the week but gave up gains late in the week. Stocks rallied sharply on Monday after news that European Union finance ministers had agreed to a $1 trillion aid package for debt-laden Greece. But the optimism was short-lived, with stocks down 3 days within the week including several sharp sell-offs or more than 1% on the day. For the week, the Dow rose 2.3%, the S&P 500 added 2.2% and the Nasdaq climbed 3.6%. Weak earnings from retailers, Senate backing for limits on credit card fees and concerns over the sustainability of European public debt helped push stocks down late in the week. Bank and credit card companies’ shares declined after the Senate voted to limit fees charged on credit and debit card transactions. The limits added to fears that beefed-up financial reform legislation could hurt profits in the sector. Visa’s stock fell almost 10%.
This morning and the short-term are looking more stable. The MSCI World Index of 23 developed nations’ stocks climbed 0.4%. Futures on the Standard & Poor’s 500 Index added 0.5% and the price of oil is up $2. Stocks in Europe gained after the European Union transferred 14.5 billion Euros ($18 billion U.S.) to Greece, the 1st installment from an almost $1 trillion emergency loan package aimed at preventing sovereign defaults. In addition, U.S. builders will probably say that April had the most housing starts since 2008, economists said before a report today.
Regards,
Wilfred Vos Bcs, FMA, CIM, CFP, FCSI, DMS, CBV, MBA, CFA
SVP & Partner
