Source: The Canadian Press
The Toronto stock market posted another big loss Wednesday as Europe’s debt crisis spread to Spain, which had its credit rating downgraded one day after Greece’s rating was lowered to junk status.
The S&P/TSX composite index lost 69.85 points to 12,076.89 following a triple-digit loss in the previous session. The market has lost 1.7% in the last two days of trading.
“What we’re watching, very closely, is the extent to which the Greek situation spills over to other parts of the financial markets,’’ said Jean-Francois Dion, a vice president and portfolio adviser at RBC Dominion Securities.
“If we saw that contagion, that would be very worrisome, in our view,’’ Dion said.
“The Greek situation is absolutely on the front burner and we expect that to be the case for at least a few weeks,’’ he added, saying a bailout planned by the International Monetary Fund and European countries may need to be bolstered if Greece has any hope of escaping its crushing debt load.
Ratings agency Standard & Poor’s was responsible for the downgrades of both Spain and Greece, and also lowered Portugal’s debt rating on Tuesday. This sent markets into a tailspin amid fears that Greece could default on its next debt payment, due May 19.
Those fears eased a little on Wednesday, however, after Germany’s finance minister said Berlin could approve its contribution to an aid package within days if Athens successfully finalizes new austerity measures.
The Canadian dollar added 0.86 of a cent to 99.13 cents US, regaining some of the ground it lost in a 1.59-cent plunge Tuesday.
On Wall Street, markets climbed after the U.S. Federal Reserve said it would continue to hold interest rates at record lows for an extended period. The Fed sounded a more confident note on the economy and said it wants to keep interest rates low to ensure the recovery gains even more traction.
The Dow Jones industrial average added 53.28 points to 11,045.27, while the Nasdaq gained 0.26 of a point to 2,471.73. The S&P 500 rose 7.65 points to 1,191.36.
The June crude contract on the New York Mercantile Exchange gained 78 cents to US$83.22 a barrel. Toronto’s energy sector was down 0.55%, while shares in Encana Corp. (TSX:ECA) lost eight cents to C$32.63.
The June bullion contract on the Nymex gained $9.60 to US$1,171.80 an ounce.
Shares in Barrick Gold Corp. (TSX:ABX) rose $1.08 or 2.6% to C$42.51 after the world’s biggest gold producer said higher gold prices and increased output helped it achieve record earnings of US$758 million in the first quarter, soundly beating analysts’ estimates.
The base metals sector slipped 0.31%. The May copper contract added half a cent to US$3.37 a pound, following a plunge of more than 16 cents on Tuesday. Teck Resources Ltd. shares gained 22 cents to C$41.27.
The financial sector fell 1.38% amid worries about what European debt problems could mean for financial institutions. Shares in CIBC (TSX:CM) lost 94 cents to C$74.49.
The TSX Venture Exchange added 1.95 points to 1,660.44.
In earnings, Canadian Pacific Railway Ltd. (TSX:CP; NYSE:CP) beat expectations for its first quarter, booking profits of $100 million or 74% more than a year earlier as it benefited from an improving economy as well as cost controls. CP stock added $1.59 or 2.7% to $59.71.
Rogers Communications Inc. (TSX:RCI.B), Canada’s largest cable TV operator and cellphone services provider, said its net profit rose 23% in the latest quarter on higher revenue and cost cutting. Still, shares in Rogers lost 59 cents to $35.06.
And Shoppers Drug Mart Corp. (TSX:SC) shares fell $1.09 or nearly 3% to $36.15 after the drug store operator said its first-quarter earnings were up 8% from a year ago to $116 million, driven by top line growth and a continued emphasis on cost reduction. However, this was below analysts’ expectations.