World energy leader bloodied to five-year low

March 7th, 2009 - 10:50 am ICT by IANS  

By Gurmukh Singh
Toronto, March 7 (IANS) Canadian markets, which are the world leader in oil and gas with over 400 top global companies registered, ended their worst week in five years Friday with the Toronto Stock Exchange (TSX) composite index slipping 531.55 or 6.5 percent.

The week-long market collapse was triggered by the $62-billion loss reported by the failed American International Group (AIG) Monday. On the last trading day of the week, the TSX composite slipped marginally by 37.7 to close at 7,591.47 points - a fall of 6.5 percent since last week - on negative reports of 651,000 lost jobs last month in the US.

North America’s third largest market, the Toronto Stock Exchange, is almost at the half-way mark of the historic peak of 15,000 points it crossed last May.

The financial sector was hammered by 10 per cent during this week, with most Canadian banks retreating on reports of less-than-expected profits. With the economy in recession, the nation’s central bank - the Bank of Canada - also cut its interest rates to the historic low of 0.5 per cent this week to spur borrowing.

However, with no positive cues from the US - which accounts for 85 percent of all Canadian exports and imports - the market slide may continue.

The Canadian jobless rate has already crossed seven percent, and there may be more bad news when Statistics Canada releases the February figures next week.

Though the government has announced a $4-billion package for it, the auto sector, which accounts for hundreds of thousands of jobs, is further sinking, with sales plunging, plant shutting and employees losing jobs.

The housing sector, another engine of growth, also continues to slide, with no signs of stability any time soon.

The Canadian economy has shrunk 3.5 percent in last quarter, shedding over 210,000 jobs.

Among the immediate measures, the nation’s parliament this week passed the budget implementation bill that will fast-track $3 billion emergency fund for immediate spending.

But with the prospect reovery in early 2010, the nation’s central bank has urged Canadians not to give in to “irrational fears” and overreact to the crisis.

“When there is a string of bad news, risk can be overstated,” said Bank of Canada deputy governor Pierre Duguay Thursday while speaking before a parliamentary committee on finance.

“People hear bad news and that affects confidence, and that can amplify (economic problems),” he said.

There could be more bad news in the coming months, but people should not panic, the bank deputy governor said.

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