Roger Biduk - Bay Street Down on Oil & Bailout Bill

Roger Biduk writes:

The Toronto stock market had its biggest point-drop in history on Monday, as investors reacted to a major defeat for the Bush administration's US$700-billion bailout of the U.S. financial industry.

The Canadian dollar also took a hit, falling $1.03 to 95.79 cents US, amid concerns about the economic fallout that will be felt from the political and financial upheaval being felt in the United States.

Toronto's S&P/TSX index fell 840.93 points Monday to close at 11,285.07, a loss of approximately $100 billion. The previous biggest one-day point drop on Canada's largest stock market was 840.26-points, on Oct. 25, 2000. At one point, the Toronto market's main index was down as much as 955 points. The TSX Venture Exchange fell 133.61 points to 1,382.03.

Crude prices also fell, sending the TSX lower as the November crude contract in New York declined $10.52 to US$96.37 a barrel. Crude has now fallen 34 per cent since surging to an all-time record of $147.27 on July 11.

Investors appeared to find little reassurance in a move by the U.S. Federal Reserve, the Bank of Canada and other central banks to pump money into the world's credit markets. The Bank of Canada said Monday that it and the Federal Reserve have agreed to expand their reciprocal currency arrangement to US$30 billion, up from the US$10 billion announced Sept. 18.

Also, the Canadian government announced Monday it had a slightly smaller budgetary surplus in the 2007-08 than originally estimated. It was $9.6 billion, down from the previous estimate of $10.2 billion. And Scotiabank economists said Monday the prices of Canada's commodity exports tumbled 8.9 per cent last month after seven consecutive record highs, and are continuing to slide.

The news from the U.S. sent the Toronto financial sector down 5.8 per cent. Royal Bank (TSX:RY), TD Bank (TSX:TD) and Bank of Montreal (TSX:BMO) have been cited as possible shoppers for assets amidst the turmoil that has engulfed U.S. banks. Royal shares were down $3.42 to $47.50, while BMO lost $4.30 to $42.

The TSX energy sector fell 10.6 per cent as energy heavyweight EnCana (TSX:ECA) was down $6.22 to $65 while Suncor (TSX:SU) lost $5.43 to $41.12.

The metals sector plunged 12.8 per cent as Teck Cominco (TSX:TCK.B) gave up $4.65, or close to 14 per cent of its value, to $28.92 even as it announced it has secured financing for its $14-billion takeover of Fording Canadian Coal Trust (TSX:FDG.UN).
The gold sector gave up 0.4 per cent even as the December bullion contract on the New York Mercantile Exchange rose $5.90 to US$894.40 per ounce.

European stock markets tumbled as Dutch-Belgian banking and insurance operator Fortis NV got an 11.2-billion-euro bailout from the governments of Belgium, the Netherlands and Luxembourg. Meanwhile, the British government announced it's nationalizing troubled mortgage lender Bradford & Bingley.

The FTSE 100 index closed down per 5.3 per cent in London, while the German DAX fell 4.2 per cent and the French CAC 40 surrendered five per cent.

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