Leo (July 23 — Aug. 22)
You can resolve to be more sensible about your plans or you can listen to your intuition, trust your imagination and go even further in your wish to follow a dream. It's precarious, delicate and difficult, but the magic of the stars is with you.
TSX Closing numbers so far in September
The TSX has lost 2,486.18 points since the beginning of September.
BUSINESS REPORTER
North American stock markets plummeted today after the U.S. House of Representatives rejected a $700 billion (U.S.) bailout plan for Wall Street while the financial crisis stiffened its stranglehold on global banks.
Canada's benchmark stock index bore the brunt of the losses - erasing more than 800 points or 6.93 per cent - in a stunning freefall that marked its biggest percentage drop in nearly eight years.
The Wall Street bailout bill - defeated by a vote of 228-205 - left White House officials scrambling, while the world's central banks ramped up their efforts to resuscitate the floundering financial system through more massive injections of cash.
Market sentiment wilted right from the opening bell after investors panned Citigroup Inc.'s speedy takeover of Wachovia Corp., the latest in a string of government-arranged marriages to rock America's financial services industry. What's more, the forced rescue of some European banks fuelled fears the credit crisis was deepening despite unprecedented government intervention in several countries.
After the dust settled, Toronto's S&P/TSX composite index lost 840.93 points to 11,285.07. The TSX had fallen by more than 900 points at its session low, capitulating under the weight of spiralling energy and financial shares.
The energy sector lost more than 10 per cent as the price of crude oil sank as the botched bailout bill dimmed prospects for global growth. Crude oil for November delivery fell $10.52 (U.S.) to $96.37 a barrel on the New York Mercantile Exchange.
"The recent sharp decline in commodity prices, as well as the extreme day-to-day volatility, reflects as much the impact of U.S. and global financial market developments as it does actual world supply/demand fundamentals for commodities," observed Patricia Mohr, a commodity market specialist with the Bank of Nova Scotia.
The TSX financial sub-index, meanwhile, was 5.79 per cent lower as investors worried domestic lenders would be caught in the undertow of the cascading financial crisis. Royal Bank of Canada, this country's largest lender, saw its shares lose $3.42 to $47.50 (Canadian).
Stock in Manulife Financial Corp., meanwhile, lost $1.55 to $36.25 after the insurance giant revealed about $600 million in exposure to Wachovia.
CEO Dominic D'Alessandro said Manulife is in an "excellent position" to weather the ongoing tumult. Nonetheless, he cautioned: "I can't tell you at this moment what the impact is or what the prospects are for our $600 million."
This country's financial institutions have so far been relatively sheltered from the winds howling around the global financial community - in part because of their cozy market position and limited exposure to the toxic mortgage-backed securities that have toppled other lenders.
Global banks and securities firms have already taken some $590.8 billion (U.S.) in asset writedowns and credit losses since America's subprime mortgage market imploded last year. At $11.6 billion, the running tally for Canadian banks is a mere fraction of that total.
"They are some of the healthiest banks on the planet," said Andrew Martyn, a portfolio manager at Davis-Rea Ltd. "But remember that banks are leveraged 15 to one on their book, so they can't afford to take on much damage without sinking ..... That's the danger.
"In simple terms, it doesn't matter if you are a good bank or a bad bank, the cost of money and the cost of funding is rising around the world."
On Wall Street, the blue-chip Dow Jones Industrial Average lost 777.68 points to 10,365.45. Investors were digesting news of Citigroup's hastily-arranged deal to buy Wachovia's banking operations. The deal, partially-assisted by the U.S. Federal Deposit Insurance Corp., would see Citigroup absorbing up to $42-billion (U.S.) of losses from Wachovia's $312-billion loan portfolio.
A new research report from American research and advisory services firm TowerGroup predicted that more mergers and restructuring would be in the cards for U.S. banks over the coming months.
The Federal Reserve, meanwhile, announced a $330 billion expansion of arrangements to boost U.S. dollar liquidity throughout the global financial system to combat the credit crisis. The action increases the reciprocal swap lines with global central banks to $620 billion, including $30 billion for the Bank of Canada.
Adding to investor angst was a flurry of news that various European governments were being forced to bail out some of that continent's most-storied lenders. The Belgian, Dutch and Luxembourg governments took a 49 per cent stake in Fortis with an 11.2 billion euro injection.
The German government and a consortium of banks pledged 35 billion euros in credit guarantees to lender Hypo Real Estate and the British government bought up the 50 billion pounds of loans held by Bradford & Bingley. Iceland's government, meanwhile, took a 75 per cent stake in Glitnir.
- With files from Chris Sorensen and the Star's wire services
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