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TSX little changed, traders focus on U.S. election, fiscal cliff resolution
Post Date: Nov. 04, 2012

TORONTO — The Toronto stock market was little changed Monday morning as traders look ahead to a U.S. election Tuesday that is deemed too close to call.

 
The S&P/TSX composite index was off 9.91 points to 12,370.5 after racking up a 0.65% gain last week, while the TSX Venture Exchange slipped 2.46 points to 1,307.58.
 
The Canadian dollar was down 0.14 of a cent to 100.3 US cents while oil prices held steady following a drop of more than US$2 a barrel Friday and copper prices added to a seven-cent slide at the end of last week.
 
The dollar moved further off early levels after Statistics Canada reported the value of building permits issued in September fell 13.2% to $6.5-billion after a jump of 9.5% in August. The decline was mainly due to a 30.8% drop in the non-residential sector.
 
U.S. indexes started the session in the red but losses deepened mid-morning after a worse than expected reading on the American service sector.
 
The Institute for Supply Management said its gauge of non-manufacturing activity declined to 54.2 in October from 55.1 in September, lower than the 54.5 reading that economists expected.
 
The Dow industrials declined 44.93 points to 13,048.23.
 
The Nasdaq composite index was 2.17 points lower at 2,979.96 and the S&P 500 index lost 5.2 points to 1,409.
 
Tuesday’s election appears to be going down to the wire, though most opinion polls indicate that President Barack Obama may have the edge over Mitt Romney in crucial swing states.
 
After the election, attention will turn to dealing with the looming fiscal cliff facing the U.S. economy.
 
The “fiscal cliff” refers to a variety of tax hikes and massive budget reductions that will come into effect at the end of December unless Republicans and Democrats can come together with an alternative budget plan. Economists warn such a shock could send the economy back into recession. International Monetary Fund chief Christine Lagarde recently warned that Canada would not escape the fallout from that.
 
Analysts say there are worries that an Obama victory would drag out negotiations to deal with the issue.
 
“We believe that the possibility of going off the fiscal cliff temporarily is higher if President Obama is re-elected,” said Anshul Pradhan at Barclays Research.
 
“We believe that the Democrats would likely push for upper income tax cuts to expire, but we are hard-pressed to see a Republican House pro-actively agreeing to such an increase. Any resolution may come in late December or worse, after the cliff hits.”
 
Also weighing on sentiment was the possibility that a clear-cut winner won’t emerge by Wednesday replica watches morning.
 
The gold sector led gainers following a steep loss Friday after a positive U.S. jobs report sent the American currency higher swiss replica watches and gold prices down more than $40.
 
On Monday, the December bullion contract on the New York Mercantile Exchange rose $8.30 to US$1,683.50 an ounce and the gold group was ahead more than one%. Barrick Gold Corp. improved by 29 cents to C$35.52 while Goldcorp Inc. climbed 74 cents to $43.65.
 
The base metals segment gained 0.85% while December copper fell two cents to US$3.46 a pound. Taseko Mines gained seven cents to C$3.12 while Turquoise Hill Resources gained 72 cents or 9% to $8.79 following a power supply deal for its Oyu Tolgoi copper-gold mine in Mongolia.
 
The energy sector was off 0.3% with the December crude contract up 16 cents at US$85.02 a barrel. Canadian Natural Resources lost 25 cents to C$29.59.
 
The financials group was also down 0.3% with Scotiabank down 25 cents to $54.41.
 
Renewed concerns over Greece also weighed on investors Monday as two votes in the country’s parliament this week could well determine if the cash-strapped country stays in the euro.
 
On Wednesday, Greek legislators are expected to vote on a 13.5-billion euro austerity package that is required by international creditors for the release of the next batch of the country’s bailout funds. Without the cash, Greece faces bankruptcy.
 
If, and when, the package of spending cuts and tax increases is passed, legislators will then have to approve the 2013 budget. That vote is scheduled for Sunday.
 
The prevailing view in the markets is that both votes will get passed but the margin of error is slim, given that a junior partner in the coalition government has said it will vote against the austerity bill if certain labour reforms are not extracted.
 
In corporate news, Silver Wheaton Corp. said its net income fell by 11% to US$119.7-million or 34 cents per share. The company’s revenue was down 13% year over year to patek philippe nautilus quartz replica watches US$161.3-million, mostly as a result of lower prices for silver. The company declared a dividend of seven cents per share, about 20% of the cash generated by operations in the quarter. Its shares dipped 81 cents to $38.64.
 
Mexican authorities have awarded TransCanada Corp. another natural gas pipeline contract. The company says it will invest about US$400-million in a 413-kilometre pipeline between El Oro and Mazatlan, which will connect with the US$1-billion Topolobampo pipeline contract that TransCanada was awarded last week. TransCanada shares gained 10 cents to $45.30.
 
European bourses were in the red as London’s FTSE 100 index lost 0.44%, the Frankfurt DAX lost 0.53% and the Paris CAC 40 declined 1.06%.
 

 

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