Start worrying about Greece again

The TSX recovered slightly after a bad day on Monday, and oil and the loonie followed suit. But global volatility appears to be the order of the week, as the Greek stock exchange plunged before next week’s snap presidential election, and China’s markets continued to ride a roller coaster despite flagging growth.

 

The day ahead

The TSX got a bit of a bump yesterday, after a rough start to the week on Monday, when the TSX/S&P Composite index had its biggest drop in 18 months. On Tuesday, the TSX closed up 0.36 percent on some gains in energy and mining stocks, but not enough to make up the 2.3% drop from the previous day.
Yesterday was mixed to the south, with the S&P staying almost steady, the Dow Jones Industrials falling, while the Nasdaq gained about half a percent. Markets in Japan, Korea and Australia are down this morning, but European markets are remaining steady, despite renewed hand-wringing about Greece’s economy, after a decent showing in the US.
The rodeo on the Shanghai Composite continues, after a five percent drop on Monday, already dubbed the “Shanghai Scare.”

The loonie edged higher, as well, on an uptick in oil prices, to 87.41. 

Oil rose yesterday, giving the loonie and the TSX a bit of a boost. But oil is down again this morning, with Brent crude at USD$65.90 and West Texas Intermediate at 62.81.

The Bank of Canada’s Financial System Review is today. The semi-annual report operates as a check-up on all the potential risks for the Canadian economy in the next half year, and will likely include concerns about the state of Canada’s housing market heading into 2015. Today’s release will also include two special reports, one on cyber-security and another on exchange traded funds.

The Russian central bank meets today. Drama will probably ensue.

 

Things you missed

Start worrying about Greece again. The Greek prime minister declared a snap presidential election for next week on Monday night, a battle that will likely be fought on the future of austerity measures, with anti-austerity Syriza leading in the polls. In response, the Athens stock market had its worst day since 1987, dropping a staggering 13%. The same day, 10-year bond yields pushed to 7.86%, and this morning, three-month bonds were at 9.4%.
Greece has been the target bailout measures and steep austerity cuts for the past five years. 2014 was supposed to signal the end of the measures, but on Monday finance ministers voted to extend the current bailout for another two years.

More volatility on Chinese markets, as the Shanghai composite bounced back today from a 5% drop on Tuesday. This morning, eight stocks had already hit the upper limit of 10% growth in a single day, while one had hit the lower 10% limit.
This despite another day of numbers on a slowing China, as November saw the slowest growth in consumer prices in five years. In terms of absolute terms, prices in China have been falling for 33 straight months – almost three years.

Despite a loss, the Hudson’s Bay Company reported a strong comeback. The department stores’ third quarter earnings revealed a $7 million net loss from ongoing operations – but it’s a fraction of what the retailer was holding a year ago. The boost comes from a doubling in retail sales and decent sales at various Saks 5th Avenue outlets, the American department store giant HBC purchased last year.

Regulation for oil and gas sector “crazy economic policy”, Harper says. The prime minister also said no other country in the world is regulating the sector. The comments were made as climate change negotiations are underway in Lima, Peru.

Note: On Wednesday, I made the election in Greece sound like a general election – it is actually a snap election in the Greek parliament. If the current prime minister does not gain enough support for his presidential candidate, the country will probably see a general election early next year. Apologies for any confusion caused!