At noon: Oil, the new bear
Friday, August 08, 2008
Friday is one of those days when it pays to overlook the carnage in Canada and instead focus on those money-losing investments in the United States, which are now looking up.
The S[amp]amp;P/TSX composite index was down 78 points, to 13,307, at midday – an improvement from more severe losses at the start, but still a dismal showing after you factor in the lower Canadian dollar. The loonie fell below 93.7 cents (U.S.), down 1.3 cents as the U.S. dollar took flight against a number of global currencies.
Among Canadian stock market subindexes, materials were the biggest drag, falling 3 per cent thanks to a poor showing from Potash Corp. of Saskatchewan Inc. and a number of gold producers. Potash Corp. fell 3.2 per cent and Barrick Gold Corp. fell 1.9 per cent. Gold traded at $855 an ounce, down $18 – representing a 15 per cent decline from its record high this year.
Meanwhile, Canada's energy subindex fell 2.8 per cent, with the price of crude oil falling further into bear market territory, defined as a drop of 20 per cent or more. Oil traded at $116.13 a barrel, down $3.89, or 21 per cent, below its high. The recent decline has erased all of the gains since early May.
In the United States, though, the surging dollar and plunging price of oil have been good news for the stock market. The Dow Jones industrial average rose 195 points, to 11,626. The broader SP 500 rose 17 points, to 1283.
There, economically sensitive consumer discretionary stocks led the way, up 3.8 per cent. Energy-sensitive industrials rose 2.7 per cent. However, the gains were widespread: 82 per cent of the stocks in the S[amp]amp;P 500 were in positive territory, while 27 of the 30 stocks in the
Dow were up.
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