North American markets get lift on Citigroup, Exxon moves
Last Updated: Monday, December 14, 2009 | 06:59 PM EST
Financial Post
Canadian stocks rallied to their best daily gain in almost two weeks, as Dubai’s debt troubles subsided and Citigroup said it was ready to pay back the U.S. government.
The S&P/TSX composite index was up 121.76, or 1.07%, to 11,545.69, as gainers outpaced losers by a ratio of three-to-one and eight of 10 subindexes closed in positive territory.
The TSX venture exchange also gained Monday adding 7.97 points or 0.56% to 1,425.08.
Meanwhile, south of the border, the Dow Jones Industrial average advanced 29.55 points or 0.28% to 10,501.05. The S&P 500 climbed 7.70 points or 0.70% to 1,114.11 and the Nasdaq composite index closed at 2,212.10, up 21.79 points or 0.99%.
“Investors reacted to good news out of Dubai and Citigroup which has helped to ease global financial concerns,” said Colin Cieszynski, market analyst at CMC Markets Canada. He added that the Exxon Mobil Corporation takeover of XTO Energy Inc. for US$41-billion helped move markets.
Over the weekend, Dubai World, the Dubai government’s core holding company, said it received a US$10-billion bailout from Abu Dhabi, enabling its Nakheel division to repay a US$4.1-billion credit note that was due Monday.
Sovereign debt has been a thorn in the heel of global markets over the past month, starting when Dubai World said it needed to reschedule its debt repayments.
Last week, markets fell hard after Fitch Ratings slashed Greece’s credit rating to BBB+ and Moody’s Investor Services downgraded Dubai government-related debt and separately released a report that contemplated possible rating downgrades of U.K. and U.S. debt as both countries struggle to deal with large fiscal imbalances and accumulated debt caused by the global crisis.
Markets on both sides of the border were also bolstered by news Monday that Citigroup is repaying US$20-billion in public bailout money, becoming the last major U.S. bank to do so.
Paying back the government will save Citi US$1.7-billion a year in dividend payments, however, the new capital being raised is expected to dilute its current shares. Citi stock fell more than 6% to $3.70.
Energy stocks were up 2.03% in Toronto, while financials climbed 1.23% and the materials group climbed 1.02%.
The Canadian dollar was up five basis points to US94.40¢, and on the New York Mercantile Exchange, crude oil was down US36¢ to US$69.51 a barrel, while gold was up US$3.90 to US$1,123.30 an ounce.
Gold has had a rough ride over the last week, falling from more than US$1,200 an ounce to about US$1,120. But TD economists Derek Burleton and Dina Cover see growing troubles for gold in 2010 and expect the metal to eventually fall back toward its long-term, inflation-adjusted average price of just US$500 to US$600 an ounce.
The Canadian dollar was up five basis points to US94.40¢.
dpett@nationalpost.com
