Lehman worries, falling oil threaten markets
The Toronto stock market slipped more than 200 points after the opening bell Thursday as fears of continued credit problems in the United States multiplied, rather than abated, sending every sector lower.
The drop followed investor unease about U.S. investment bank Lehman Brothers' recovery plan and speculation about whether oil prices could move below $100 a barrel before the end of the session.
Toronto's S&P/TSX composite index fell 233.58 points to 12,546.99 after gaining 350.39 points on Wednesday.
The Canadian dollar was at 93.13 cents US, down 0.35 of a cent after Statistics Canada said that the country's trade surplus with the rest of the world fell to $4.9 billion in July from a revised $5.6 billion in June.
Exports continued to rise, up 2.2 per cent to $44.3 billion in July with volume up 1.7 per cent and prices half a per cent.
The energy sector dropped 1.8 per cent as oil prices slipped lower despite hurricane Ike's march toward oil platforms in the Gulf of Mexico.
The light, sweet crude September contract slid six cents to US$102.52 a barrel on the Nymex.
Concerns have centred around whether hurricane Ike could harm refinery operations in the Gulf of Mexico, falling U.S. crude inventories and an OPEC decision to cut production by 500,000 barrels a day.
Ike, coming on the heels of last week's hurricane Gustav, was expected to blow ashore early Saturday somewhere between Corpus Christi and Houston, with some forecasts saying it could become a Category 4 storm.
On Wall Street, the Dow Jones industrial average fell 146.80 points to 11,122.12.
Investors latest concern about the financial sector follows Lehman Brothers Holdings Inc.'s announcement Wednesday that it plans to sell its investment management unit and spin off its commercial real estate assets guaranteed cash advance. The company is seeking to raise cash after making bad bets on holdings tied to real estate.
The Nasdaq composite index lost 35.30 points to 2,193.40, while the S&P 500 index slid 18.11 at 1,213.93.
The U.S. Labour Department reported that jobless benefit applications fell less than expected to 445,000, down by 6,000 from the prior week.
In earnings, Vancouver-based sportswear retailer Lululemon Athletica Inc. (TSX: LLL) posted a profit of just over US$11 million in the second quarter on higher revenues.
But the revenue figure, which was 48 per cent higher than a year ago, fell below analyst expectations. Shares in the company were down four cents to $19.19.
Canadian companies expected to report later Thursday include Transcontinental Inc. (TSX: TCL.A) and Sobeys supermarket chain owner Empire Company Ltd. (TSX: EMP.A).
Overseas, Britain's FTSE 100 fell 1.66 per cent, Germany's DAX index fell 1.72 per cent, and France's CAC-40 lost 1.52 per cent.
Asian markets fell sharply Thursday as the troubles at Lehman Brothers fanned fears of more credit-market losses and drove down financial company shares across the region.
Japan's key stock index sank to its lowest in nearly six months as investors dumped banks and brokerages. The Nikkei 225 closed down 1.98 per cent to 12,102.50 – its lowest closing level since March 18.
In Hong Kong, the Hang Seng Index shed 3.1 per cent to 19,388.72, its worst finish since March 20 last year.