The Vancouver Sun ~ Markets plunge despite government aid Canwest News Service

Published: Wednesday, November 12, 2008

The Toronto Stock Exchange was poised to finish down more than five per cent Wednesday despite the Canadian government’s attempt to help the country’s financial situation, as oil and other commodities continued to lose value.

At 4 p.m. local time, the S&TSX composite index was down about 518 points to 8,905, or around 5.5 per cent.

In the U.S., the Dow Jones industrial average was set to close at about 8,235, down 399 points, or about 4.5 per cent. The Nasdaq composite index was down about 82 points, or five per cent.

Crude oil on the New York Mercantile Exchange was down $3.17 US to $56.16 US a barrel, its lowest level in 20 months. Gold fell $14.50 US to $718.30 US an ounce.

The Canadian dollar was about 80.81 cents US, down from about 83.58 cents US on Monday. There was no official closing figures Tuesday due to Remembrance Day.

Adrian Mastracci, portfolio manager at KCM Wealth Management Inc., said the Canadian government’s announcement to buy up to $75 billion worth of insured Canadian mortgages early Wednesday and the U.S. announcing a plan to cut monthly payments for homeowners to prevent more defaults on Tuesday were red flags.

"They are doing this because things are not going well. This is probably a much bigger problem than we thought," he said.

Mastracci also pointed to bad news coming from companies Circuit City and GM earlier this week as "ringing the bell," and more losses were to come in the new year if holiday retail sales are poor.

In Asia, Japan’s Nikkei average closed down 113.79 points, or 1.29 per cent on Wednesday. Hong Kong’s Hang Seng index dropped 101.81 points, or 0.73 per cent.

The FTSEurofirst 300 index of top European shares closed down almost 1.81 per cent, or about 76.99 points. Germany’s DAX was down 140.78 points, or 2.96 per cent, and the French CAC 40 was down 102.45 points, or 3.07 per cent.