Stock markets open higher
Posted Oct 5, 2011 7:47 am.
This article is more than 5 years old.
The Toronto Stock Exchange opened slightly up Wednesday, but then quickly retreated to the red. Both the DOW and NASDAQ opened in negative territory as well. The Canadian dollar opened at 95.20 cents US, up 0.40 of a cent from Tuesday’s close.
This amid published reports that European Union officials are examining plans for a co-ordinated recapitalization of European banks.
In an interview with the Financial Times, European Commissioner Olli Rehn hinted at a possible bank recapitalization plan.
Investors have been concerned over the last couple of months about the slowing pace of economic revival and a possible debt default by Greece, which would worsen economic conditions and cause havoc on the European financial sector.
An announcement that ratings agency Moody’s Investor Services had downgraded Italy’s debt by three notches to A2 was taken in stride on financial markets. Moody’s cited high debt, a weak global economy and political uncertainties.
Meanwhile, Franco-Belgian bank Dexia was in the spotlight once again Wednesday amid mounting expectations that it will be broken up somehow, possibly as soon as Thursday.
Dexia has been at the forefront of investor concerns over its exposure to potentially bad debt from Europe’s most indebted countries. Investors are concerned about what bonds Europe’s banks are holding, and banks themselves have become reluctant to lend to one another.
In Asia, Japan’s Nikkei index closed 0.9 per cent lower and Korea’s Kospi index ended 2.3 per cent down.
Stock markets in Hong Kong and mainland China were closed for a holiday.
European bourses advanced with London’s FTSE 100 index up 1.94 per cent, Frankfurt’s DAX gained 3.94 per cent and the Paris CAC 40 advanced 2.75 per cent.
Oil prices advanced with the November crude contract on the New York Mercantile Exchange ahead $2.17 after losing almost $2 on Tuesday to its lowest close since Sept. 2010.
Other commodities were mixed with December gold in New York ahead $1.40 to $1,617.40 US an ounce while December copper prices were unchanged at $3.10.
The TSX has closed lower for the past three days, leaving Canada’s biggest stock market in bear market territory, down 22 per cent from its 2011 highs from early March.
Commodity prices have taken a huge hit since early August when investors started to get concerned that global growth was faltering and there was a growing possibility that economies could slide back into recession.
That in turn has resulted in large losses in energy and mining companies on the resource-heavy TSX as oil prices have slid about 20 per cent in the last two months while copper has plunged 31 per cent.
Copper is widely viewed as a barometer for the health of the overall global economy since it is used in electronics, homes and infrastructure.
