The financial component of the combined index and Standard and Poor’s TSX lost nearly 15% since the beginning of the third quarter of 2011, a performance far superior to that of U.S. financial stocks during the same period.
Because of the instability in Europe and the United States, bank stocks have been hit very hard. For example, the interest component of the S & P 500 has lost more than 25% during the quarter. It is mainly the good reputation of Canadian banks that allowed them to salvage the third quarter, according to the latest “Economic and Financial Outlook” Desjardins.
“The correction has been until now no relation to the 2008 and 2009,” says Desjardins Financial emphasizing that were not the only ones to lose. Indeed, the S & P / TSX was down almost as much as the U.S. stock market during this period, the index was weighed down by heavy losses in the securities industry, energy and information technology.
Desjardins provides that the indices remain volatile in the coming months as signs of a collapse of the European banking system or a U.S. recession could lead to further correction. Although a resurgence of investor confidence, triggered by new government measures or money, could bounce indices, the risks are rather on the downside, due to the fragility of the economy.
Energy down
The slowdown in oil consumption observed in developed countries has driven down Desjardins forecasts for this year and next year: “This will be partially offset by a further increase in demand from emerging countries, but these latter are not fully immunized against the global slowdown. ”
The price of energy could then take the path of the drop in the coming months: “The annual average prices of WTI (West Texas Intermediate) are forecast at $ 92 per barrel in 2011 before declining slightly US $ 88 next year, “predicts Desjardins.
As for the price of base metals, they should also be affected by weak economic growth. For cons, the depletion of certain deposits and strong demand from emerging countries could give them some support, provides Desjardins.
Bloomberg Photo
