Stock market outlook gloomy amid more disheartening economic data
38 minutes ago
By The Canadian Press
TORONTO - Overseas stock markets are weak and Wall Street index futures indicate a down open as investors fret over the economy.
In Canada, the Bank of Nova Scotia (TSX:BNS) has warned of a bigger-than-expected $595-million hit to its quarterly earnings caused by financial-market upheaval. The other banks are expected to suffer similarly to Scotiabank, which releases its results Dec. 2.
Bank of Canada governor Mark Carney strongly indicated today that the central bank will cut interest rates further next month in an effort to stimulate the economy. Carney told a luncheon in London that downside risks have grown, while inflation is less of a concern.
The Canadian dollar was at 80.78 cents, down 0.53 cent after losing 0.44 cent Tuesday, as commodity prices kept declining.
Crude oil fell under US$54 a barrel, trading down 72 cents at $53.67 after going as low as $53.30 in overnight electronic trading on the New York Mercantile Exchange.
Copper was down 4.4 cents at US$1.6275 a pound.
In economic news, Statistics Canada's composite leading index - an indicator of future activity - fell 0.4 per cent in October. It was the biggest drop since the early-1990s recession, after a 0.3 per cent drop in September.
New American data showed deepening weakness. Construction of new homes plunged 4.5 per cent last month to the lowest level on government records. The Commerce Department said residential construction fell to an annualized rate of 791,000 units.
U.S. consumer prices, meanwhile, fell by the largest amount in records dating back to 1947, down one per cent last month as gasoline prices receded sharply. Core prices, excluding volatile food and energy costs, were down 0.1 per cent - the first decline in more than a quarter-century.
Financial market will again be fixated on congressional testimony by executives of General Motors Corp., Ford Motor Co. and Chrysler LLC. They are appealing for a multibillion-dollar infusion of taxpayer cash to prevent massive layoffs and stabilize the companies.
Investors are concerned that a collapse of any - or all - of the Detroit-based automakers would ripple through an already sagging economy.
In early earnings news, supermarket operator Metro Inc. (TSX:MRU.A) rang up $72.3 million in summer-quarter profit, up 25.5 per cent from year-ago earnings that were reduced by the integration of A&P stores. Sales were $2.48 billion, up 1.8 per cent from a year ago, or 1.5 per cent on a same-store basis.
Wall Street rebounded Tuesday in another turbulent session, as investors rushed back into the market to test a 2003 low. The Dow Jones industrial average finished up 151 points, with most of the gain coming in the final hour.
Toronto's S&P/TSX composite index, meanwhile, closed up 40 points.
Overseas stock markets were in the red, with a noticeable exception in Shanghai, where the benchmark Chinese index gained 6.1 per cent, peeking back over 2,000 - down from 5,500 early this year.
Tokyo's Nikkei index declined 0.7 per cent and the Hang Seng in Hong Kong was down 0.8 per cent.
Losses were steeper in Europe, with the FTSE 100 down 2.5 per cent early in the afternoon in London. The German DAX shed 3.5 per cent and the Paris CAC-40 lost two per cent.
Copyright © 2008 Canadian Press
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