The last full trading week of the month begins on Monday, August 24th with traders and investors alike looking to see if the uncertainties of the Chinese economy will once again weigh on the North American markets.
And they didn’t have to wait very long as the markets opened hard to the downside with the Dow Industrials and the TSX Composite down a respective 1,000 and 700-points in the first 5-minutes of trading.
Bloomberg reported that American exchanges have traded over US$18.2-trillion of Exchange Traded Funds or ETFs in the past 12-months, a full 17% increase over the previous 12-month period and more than triple what it was just 10-years ago.
The markets opened higher on Tuesday, August 25th, after the People’s Bank of China lowered its 1-year lending rate by another 0.15% to 4.6% and also dropped its deposit rate by 0.25% to 1.75%.
Technical analyst Ron Meisels commented – “Yesterday’s action clearly indicated a ‘selling climax’. Most of the indicators are at or near major supports.” (For a full copy of this report please contact email@example.com.)
The share price of Pepco Holdings (POM-N) fell by almost 16.5% to US$22.52 after the Public Service Commission of the District of Columbia sighted monopoly concerns in rejecting the proposed takeover of the utility by fellow utility Excelon Corp. (EXC-N).
The Financial Times reported that Mexico has tried to protect itself from falling crude oil prices by hedging or selling forward most of its 2016 production at US$49-a-barrel. (One can only wonder the ramifications if the price of oil was to suddenly spike upward over US$50.)
The markets gained more traction on Wednesday, August 26th on suggestions that the recent market turmoil may once again force the U.S. Fed to delay its pending September hike in overnight interest rates.
McDonalds Corp. (MCD-N) shares rose on rumours that the world’s largest restaurant chain may free up some of its investor value by turning its estimated US$20-billion of real estate into a publicly trading Real Estate Investment Trust or REIT.
The shareholders’ of Cameron International (CAM-N) were very pleased to see their investment surge up by over 41% to US$17.54 when the oil services company accepted a US$14.8-billion cash & stock takeover offer from petroleum industry giant Schlumberger Ltd. (SLB-N).
Thursday, August 27th saw Goldcorp Inc. (G-T) pull off a deal similar to the old double switch in baseball as it purchased New Gold’s (NGD-T) 30% portion of the El Morro copper-gold project in Chile and then immediately announced it would equally joint venture the project with Teck Resources (TCK.B-T)and their nearby Relincho gold-copper project.
Still with mining, Freeport-Mcmoran (FCX-N) shares’ surged up by almost 29% to US$10.21 when the giant copper producer succumbed to lower metal prices and announced a 25% cut to its mining budget and a 10% reduction in its payroll.
The CIBC (CM-T) and the Toronto-Dominion Bank (TD-T) joined the other Big-Six Canadian banks in reporting better than expected 2nd quarter financials.
The markets continued their rally late in the trading day after the U.S. Commerce Department revised their country’s 2nd-quarter gross domestic product or GDP up by 1.4% to a better than expected annualized 3.7%.
And just how popular is Facebook Inc. (FB-N)? The giant online social media site announced that on any given day, 1-billion people or just under 1/7th of the world’s population are browsing its pages.
American economic new once again supported the markets on Friday, August 28th when the U.S. Commerce Department reported that their consumer spending rose in July by a better than expected 0.3%.
Another reason for the recent surge in the price of Freeport-Mcmoran (FCX-Ncame to light when activist investor Carl Icahn announced he had purchased 88-million shares or 8.5%, making him the largest single shareholder of the giant copper miner.
Petroleum industry analyst Genscape Inc. reported that Canadian oil exports by rail have fallen by almost 50% in the past year to just 85,606 barrels-a-day.
Crude oil rose by over 16% on the last 2-days of the week to US$45.37-a-barrel, the black gold’s largest 2-day rally since the great recession of 2009.
The extreme market volatility broke many mid -to-long-term trends with the NASDAQ setting new 10-month low of 4,506, while the S&P 500 dropped to a new 11/3-year low of1,868, and the DJIA fell to a 2-year low of 15,666. Canadians fared no better as the TSX Composite Index dropped to a 2-year low of 13,053 and the TSX Venture Exchange plunged to a new record low of 518. All of which shot the VIX up to a new 4-year high of 40.74. With commodities, copper fell to a new 6-year low of US$2.24-a-pound and crude oil dropped to a new 61/2-year low of US$38.28-a-barrel. All of this helped to push the CRB Spot Commodity Index down to a new 6-year low of 403 and the Canadian petro-dollar down to a new 11-year low of US$0.7795.
Emera Inc. (EMA-T) at $47.51, Onex Corp. (OCX-T) at $80.44 and Tamarack Valley Energy (TVE) at $2.59 were three of the very few companies to set new TSX 52-week trading highs, while BlackBerry Ltd. (BB-T) at $8.56, Canadian Tire Corp. (CTC.A-T) at $109.05 and Finning International (FTT-T) at $18.57 were just three of the many new TSX 52-week trading lows.
For the Week – The Dow Industrials gained 1.11% to 16,643, with the S&P 500 Index up by 0.91% to 1,989 and the NASDAQ Exchange ahead by 2.59% to 4,828. To the Blue Jays are in first place north, the TSX Composite Index rose by 2.90% to 13,865 and the TSX Venture Exchange improved by 3.35% to 556.
With commodities, the price of gold bullion fell by 2.24% to US$1.134, with copper up by 1.74% to US$2.34, while crude oil gained 12.16% to US$45.37 and natural gas rose by 0.74% to US$2.72. Overall the CRB Spot Commodity Index was lower by 1.22% to end the week at 405.
The Canadian dollar eased by another 0.30% against its American cousin to finish the week at US$0.7560.
And the closely watched CBOE Volatility Index or VIX dropped by 0.52-point to end the week at a slightly calmer level of 27.51.
And Finally – The C.D. Howe Institute calculates that Canadian business’ would collectively save up to $4.4-billion a year if it cut back or eliminated some or all of the 350-million paper cheques that they write every year.
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