TORONTO – The Toronto stock market was lower Friday amid growing skepticism about whether American lawmakers can keep the U.S. economy from going over the so-called fiscal cliff.
The S&P/TSX composite index dropped 60.15 points to 12,313.62 as the clock ticked towards huge spending cuts and significant tax increases that will automatically click in after Dec. 31 if there is no deal.
The American economy is already weak and economists warn the imposition of those measures could tip the U.S. back into recession and depress other economies around the globe unless the White House and Congress find a compromise budget plan.
The TSX Venture Exchange slipped 0.15 of a point to 1,196.6.
The Canadian dollar was down 0.09 of a cent at 100.42 cents US.
U.S. markets were also lower with the Dow industrials down 86.14 points to 13,010.17, the Nasdaq dropped 10.19 points to 2,975.72 and the S&P 500 index declined 8.32 points to 1,409.78.
That meant stock markets were headed for a negative end to a shortened trading week as top U.S. lawmakers continued to cast blame on each for the fiscal-cliff impasse while portraying themselves as open to a reasonable last-minute bargain.
Congressional leaders and President Barack Obama were meeting later Friday at the White House (at 3 p.m. EST) for last-minute talks. Obama and congressional Democrats want a deal that would let tax rates rise for the wealthiest taxpayers, a measure opposed by Republicans.
Traders have been focusing on Washington and the budget negotiations since the Nov. 6 presidential election returned a divided government to power.
“I can’t wait till this is done, so we can start talking about markets again and not just about politics,” said Doug Cote, chief market strategist at ING Investment Management. Cote added that he doesn’t expect lawmakers will manage to reach a deal before the deadline.
Traders took note of an apparent improvement in the housing sector as the number of Americans who signed contracts to buy homes increased last month to its highest level in two and a half years.
The U.S. National Association of Realtors says its seasonally adjusted pending home sales index rose 1.7 per cent in November from October to 106.4.
The increase points to higher sales of previously occupied homes in the coming months. There’s generally a one- to two-month lag between a signed contract and a completed sale.
Commodities were mixed and February bullion declined $7.80 to US$1,655.90 an ounce while the gold sector declined about 0.8 per cent. Barrick Gold Corp. (TSX:ABX) faded 30 cents to C$33.94.
The industrials sector was also down 0.8 per cent with Bombardier Inc. (TSX:BBD.B) down five cents to $3.71.
March copper closed down a penny at US$3.59 a pound. The mining sector fell 0.5 per cent with Teck Resources (TSX:TCK.B) down 36 cents to C$35.23, while First Quantum Minerals (TSX:FM) gave back 34 cents to $21.15.
The energy sector also dropped 0.5 per cent with February crude on the New York Mercantile Exchange down 21 cents to US$90.66 a barrel. Suncor Energy (TSX:SU) declined 41 cents to C$32.21 while Talisman Energy (TSX:TLM) shed 15 cents to $11.02.
The financial sector was also a drag with Scotiabank (TSX:BNS) down $1.19 to $57.30.
On the corporate front, Research In Motion Ltd. (TSX:RIM) shares edged up three cents to $11.73. The BlackBerry maker has sold NewBay to mobile services company Synchronoss Technologies Inc. for US$55.5 million. NewBay’s cloud-based services allow customers to store, share and deliver content like photo albums, social networking and other data through smartphones, tablets and other electronic devices.
