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| Market Watch - February 12, 2010 |
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EU rescues Greece; Canada sets housing record; and stocks buoyed by Greece deal
Big picture
EU rescues Greece; Canada sets housing record
European leaders struck a deal to provide financial aid to debt-laden Greece in an unprecedented move to restore confidence in the euro. Greece’s prime minister vowed to slash the deficit, triggering a public sector strike against cost-cutting measures such as wage freezes. U.S. Fed Chairman Ben Bernanke outlined a stimulus exit strategy, proposing to remove some cash from the financial system and then raise interest rates, but made it clear that it was too early to implement.
The U.S. trade deficit widened in December, signalling the economy is growing but perhaps not as fast as expected. Canada recorded its first annual trade deficit in 34 years last year due to a dramatic drop in commodity prices at the start of 2009. Canada’s housing starts swelled 5.8% in January, topping forecasts, and existing-home sales soared to a record high, up 13.2% from a year ago. China overtook Germany last year as the world’s leading exporter and is set to overtake Japan as the second largest economy in the world. Russia halted interest-rate cuts because of heightened inflation and global economic uncertainty.
Markets
Stocks buoyed by Greece deal
Global markets rallied early in the week, anticipating Thursday’s deal by European leaders to bail out Greece. The optimism even buoyed the TSX after quarterly results from two of Canada’s big life insurers missed expectations. In the U.S., markets were also optimistic, as first-time jobless claims were down. In quarterly results, Coca-Cola sales were up 5% boosted by China and India, and Molson Coors profit doubled on favourable tax benefits even as global sales fell 4%. The New York Times tripled its fourth-quarter profit, ending the year in the black, despite a 20% drop in print advertising. Air Canada narrowed its quarterly loss to $56-million, down from $727-million a year ago, and will expand its fleet with 15 new turboprops.
Google launched a social network called Buzz and announced it is building a super-fast broadband network in trial locations in the U.S. Scrutiny is mounting over Toyota, leading to more recalls and reviews. Toyota is repairing 50,000 vehicles a week in the U.S., with a total of 8 million vehicles recalled on five continents. MDS will close its Montreal unit and focus on its Ottawa-based core business of producing isotopes used in medical imaging.
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