Roger Biduk - Bay Street Lower on Energy & Financials

Roger Biduk writes:

The Toronto stock market plunged more than 500 points Monday, in large part because of tumbling energy stocks as oil prices closed below US$100 dollars US a barrel for the first time in six months.

The market was also hurt by financial stocks after two more big U.S. investment banks were overwhelmed by the collapse of the American housing sector and securities that financed the bubble.

Lehman Brothers (LEH) sought bankruptcy protection while Merrill Lynch agreed to be taken over by Bank of America.

Overall, the S&P/TSX composite index fell 515.55 points or over four per cent to 12,254.03. The market is down 18.7 per cent from its most recent high from June 18.

The Canadian dollar - pressured by sagging prices for oil and other resource exports - eased 0.6 cent to 93.64 cents U.S. even as the U.S. dollar slid against the euro.

The TSX Venture Exchange lost 72.72 points or 4.5 per cent to 1,534.81.

The Toronto energy sector pulled back almost six per cent as the October crude contract on the New York Mercantile Exchange fell $5.47 to US$95.71 a barrel, partly because hurricane Ike largely spared Gulf of Mexico energy infrastructure.

But analysts said investors feared that the upheaval in the financial sector could trigger another round of commodities liquidation - especially with Lehman likely to unwind its holdings. Other investors may also unload commodities, fearing that the deepening economic crisis will further reduce demand for energy and raw materials futures.

EnCana Corp. (TSX:ECA) lost $3.69 or five per cent to $68 and Suncor Energy (TSX:SU) retreated $3.95 or 7.9 per cent to $46.25.

The TSX metals and mining sector retreated by more than seven per cent as analysts said investors feared the upheaval in the financial sector could trigger another round of commodities liquidation - especially with Lehman likely to unwind its holdings.

Other investors may also unload commodities, fearing that the deepening economic crisis will further reduce demand for energy and raw materials futures.

Teck Cominco Ltd. (TSX:TCK.B) down $2.37 or six per cent to $36.64 and Fording Canadian Coal Trust (TSX:FDG.UN) fell $9.27 or 10 per cent to $81.83.

Market heavyweight Potash Corp. (TSX:POT) retreated $8.39 or 4.8 per cent to $163.83.

The gold sector was down 4.8 per cent even as investors bought bullion as a haven. The December gold contract on the Nymex rose US$22.50 to US$787 an ounce and Goldcorp Inc. (TSX:G) faded $2.85 or nine per cent to $28.51.

Anxiety about the financial sector prodded the Toronto financial group down by two per cent. Royal Bank declined $1.10 to $48.10 and CIBC (TSX:CM) lost $3.06 to $61.11, slightly off early low it said it doesn't have "large exposures" to Lehman.

On the TSX, declines beat advances 1,300 to 302 with 153 unchanged as 419 million shares traded worth $7.8 billion.

Roger is a investment advisor and services clients in Montreal, Hudson, West Island and throughout the provinces of Quebec & Ontario.

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