By Jamie Sturgeon, Financial Post | 09.19.2008The Toronto Stock Exchange roared well over 600 points on Friday as news broke that the United States federal government is orchestrating a massive plan to take on toxic assets that have wreaked havoc on the global financial system this year.
Led by a strong rebound in financial stocks, the S&P/TSX composite index had climbed 641 points or 5.5% higher to 12,708.8 by early afternoon. The Dow Jones industrial average moved more than 325 points higher to 11,347.1, while the S&P 500 was 54 points or 4.5% higher at 1,261.
"The triple-header of a proposed ... fund to buy distressed debt, a temporary ban on short sales, and a guaranty program for money market mutual funds sent all markets into a stunning U-turn," said Douglas Porter, deputy chief economist at BMO Capital Markets in an afternoon research note.
In Toronto, battered financials led the remarkable rise, as Toronto-Dominion Bank (TD/TSX) rose $4.12 or more than 7% to to $63.38 by the early afternoon. Canadian Imperial Bank of Commerce (CM/TSX) was also sharply higher, rising almost $2.82 or 4.7% to $62.50. Royal Bank shares (RY/TSX) were up $1.81 or 3.7% to $49.77, while Bank of Nova Scotia (BNS/TSX) was $2.37 or 5% higher at $49.74.
"We were overdue for a rally [but] I don't know if this is necessarily the beginning of the recovery," said John Zechner, chairman of Toronto-based money manager J. Zechner Associates Inc in an interview. "I think its going to be shaky going forward but the market was oversold on the downside.
"You needed some event to get it turned around."
Gold stocks were also lifted by the broad rise even as futures slide to their lowest level in 28 years in New York as investors poured back into equities.
Goldcorp (G/TSX) saw its shares rise by $2.21 or 7.2% to $32.65, while Barrick Gold Corp. (ABX/TSX) was up by $2.90 or 8.9% to $35.40.
No sub-indices were left behind, as other commodity stocks also soared. Potash Corp. (POT/TSX) rose by $18.50 or 11% to $185.40, while metals miner Teck Cominco Ltd. (TCK.B/TSX) rose $1.90 or 5.3% to $37.83.
Technology stock were sharply higher as well. BCE Inc. (BCE/TSX) soared over 8% to $37.45 as Scotia Capital upgraded the telecommunication giant's stock as it nears going private. Research in Motion Ltd. rose $12.50 or 13% to $109.03 as well.
Nortel gained back 18 cents a share or 6.2% to $3.08 after losing over 50% of its value just days earlier in what has been one of the most volatile weeks for stocks in memory.
The price of crude rose above US$100 a barrel on Friday as well, lifting energy giant Encana Corp. more than $2.33 or 3.3% to $74.11 in early afternoon trading. Suncor Energy Inc. (SU/TSX) was up more than $4.22 or 9.2% to $49.74.
The surge on North American exchanges follows huge gains in Asia and Europe as Markets gave a resounding endorsement to the U.S. government's actions.
U.S. Treasury Secretary Henry Paulson announced plans on Friday morning to hammer out a bipartisan legislative package by the end of the weekend that will allow the U.S. federal government to purchase asset-back securities from beleaguered banks that are at risk of failing.
Congress will likely vote on a bill sometime next week, Mr. Paulson said in speech in Washington, D.C.
Both the London FTSE 100 and French CAC 40 surged more than 8%. In Asia, the Nikkei 225 rose sharply, as did the Hang Seng index in Hong Kong.
"We may retest the lows again but this reminds me a lot of where we were in January," Mr. Zechner said. "There may be more bad news ahead, but I think the market was just overly pessimistic."
Still, there are "no iron-clad guarantees that this puts an end to the financial crisis," BMO's Mr. Porter said. "After all, there have been many false dawns before in the past year."
Financial Post
jasturgeon@nationalpost.com
No comments:
Post a Comment