The Toronto stock market appeared heading for a lower open Monday while traders focused on Greece’s difficulties in thrashing out a deal with private creditors to reduce the value of their holdings of Greek debt.
Markets appeared to take in stride Standard & Poor’s downgrade of nine eurozone countries on Friday.
The Canadian dollar was higher, up 0.27 of a cent to 98.05 cents US a day before the Bank of Canada makes its next announcement on interest rates. The central bank is widely expected to keep its key rate at one per cent.
New York markets were closed for the Martin Luther King holiday.
Analysts said the S&P downgrades, officially announced Friday after markets closed, had been widely expected, especially in the bond markets.
There was very little shock at S&P’s announcement to strip France of its treasured triple-A rating and to cut its view on a raft of other euro countries, including Italy. One bright spot was that Germany, Europe’s biggest economy, retained its triple-A rating and had its outlook upgraded to stable from negative.
Also, on Monday, rival ratings agency Moody’s says it is maintaining France’s top-tier AAA credit rating for now with the outlook stable. S&P rates France’s outlook as negative.
A bigger headache for markets at the moment is whether Greece can clinch a deal with its creditors. Last October, Greece’s partners in the eurozone sanctioned a deal whereby Greece’s creditors agreed on a deal to reduce the value of their Greek debt holdings so that the country’s debt burden is reduced.
The deal with private investors, known as the Private Sector Involvement, or PSI, aims to reduce Greece’s debt by €100 billion by swapping private creditors’ bonds for new ones with a lower value. It is a key part of a €130 billion international bailout, the second one for Greece.
Talks broke off Friday but it is expected that talks on the PSI will resume this coming week.
Commodity prices advanced with the February contract on the New York Mercantile Exchange ahead 70 cents to US$99.40 a barrel in electronic trading.
March copper added a penny to US$3.65 a pound and February gold gained $13.20 to US$1,644 an ounce.
The S&P decision met with a fairly calm response on European markets and London’s FTSE 100 index and the Paris CAC 40 added 0.05% while Frankfurt’s DAX gained 0.46%.
Earlier in Asia, markets responded more negatively to the S&P downgrades and Japan’s Nikkei 225 index slid 1.4%, Hong Kong’s Hang Seng lost one per cent and South Korea’s Kospi dropped 0.9%.
In mainland China, the Shanghai Composite Index lost 1.7% while the smaller Shenzhen Composite Index dropped 3.3%.
In corporate news, Anaconda Mining Inc. (TSX:ANX) cited a big foreign exchange reversal as a major reason for posting a second-quarter net loss. The Toronto-based gold miner with producing operations in Newfoundland posted a net loss of $790,000 or four cents per share in the three months ended Nov. 30. Comparative figures for the same prior-year period were not provided.
Pembina Pipeline Corp. (TSX:PPL) has agreed to purchase all issued and outstanding shares of Provident Energy Ltd. (TSX:PVE) in a transaction valued at $3.2 billion in shares. The combined company will have a market capitalization of $7.9 billion, making it one of Canada’s largest publicly traded energy infrastructure companies.