World markets down on Syria fears
Prospect of U.S.-led military intervention causes anxiety across stock markets
The Toronto stock market was lower Tuesday, joining other global markets in pulling back amid worries about the possible ramifications of Western countries intervening in Syria's civil war.
Selling pressure extended to most financials even as two of the big Canadian banks turned in strong earnings reports.
The S&P/TSX composite index lost 169.08 points or 1.32 per cent to 12,591.21 with losses limited by gains in gold and energy stocks as geopolitical uncertainty send bullion and oil prices higher.
The Canadian dollar rose 0.26 of a cent to 95.47 cents US on Tuesday, after declining earlier in the day as traders sought the perceived safe haven of the U.S. currency.
Mounting tensions with Syria sent gold and oil prices higher. Gold reached its highest price since mid-May with the December contract for gold up $27.10, or 2 per cent, to $1,420.20 US an ounce. In energy trading, crude oil rose $3.09, or 2.9 per cent, to $109.01 US a barrel, the highest since February 2012.
U.S. indexes down on Syria news
U.S. indexes were lower a day after U.S. Secretary of State John Kerry claimed it was "undeniable" that the Syrian government had used chemical weapons.
The prospect of a U.S.-led military action against the Assad regime became more likely Tuesday.
In an interview with BBC television U.S. Defence Secretary Chuck Hagel said Tuesday that the U.S. military had "moved assets in place to be able to fulfil and comply with whatever option the president wishes to take,"and the Reuters news agenmcy reported that representatives of "Western powers" had told the Syrian opposition to expect a Westeren-led attack in days.
The threat of military intervention was enough for investors to cut their exposure to risky assets such as stocks and the Dow Jones industrials fell 170.33 points to a two-month low of 14,776.13.
The Nasdaq was down 78.13 points to 3579.44 while the S&P 500 index lost 25.53 points to 1631.25.
"The law of unintended consequences and the history of previous military interventions in the region is not a recipe for political and economic stability," said Neil MacKinnon, global macro strategist at VTB Capital in New York.
On the economic calendar, traders took in data showing rising American consumer confidence. The U.S. Conference Board's August index came in at 81.5, up from 80.3 in July.
The strong reading followed other data released during the past two sessions that contained disappointing readings on home sales and durable goods orders.
Traders have been wondering if the Federal Reserve thinks the economy is strong enough to allow it to start to reduce its monetary stimulus next month.
At present, the Fed is buying $85 billion US of financial assets a month in order to lower long-term interest rates and shore up the U.S. economic recovery. Up until recently, a run of data, particularly related to the labour market, had ratcheted up expectations that the so-called tapering will begin in September.
Oil rises up on concern about unrest
The price of oil has risen more than 15 per cent in the past three months on concern that unrest in Egypt and civil war in Syria could disrupt production and exports, especially in Libya and Iraq. It has also raised the spectre of spreading violence that could block important supply routes.
The base metals component was down 0.4 per cent even as signs of improving economies in the U.S. and China pushed copper prices higher with the September contract in New York up one cent at $3.33 US a pound.
Other data Tuesday showed that the Standard & Poor's/Case-Shiller 20-city home price index rose 12.1 per cent in June from a year earlier, nearly matching a seven-year high.
And China's National Bureau of Statistics said that profit growth for industrial companies ran ahead to 12 per cent in July from 6.3 per cent in June.
European bourses were negative as London's FTSE 100 fell 0.61 per cent, Frankfurt's DAX declined 1.96 per cent while the Paris CAC 40 lost 2.17 per cent.