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Stock market seesaw continues as TSX and Dow Jones sell off Thursday – CBC.ca

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Fear dominated financial markets again on Thursday, and stocks fell sharply on worries about the fast-spreading virus outbreak. It’s the latest shudder in Wall Street’s wildest week in more than eight years.

The Dow Jones Industrial Average sank 968 points, or 3.6 per cent wiping out most of its surge of 1,173 points a day earlier.

The Toronto Stock Exchange lost 225 points or more than 1.3 per cent to close at 16,554. 

Markets have been stuck on an up-and-down roller coaster for weeks because of uncertainty about how much damage the outbreak of the new coronavirus will do to the global economy.

Thursday’s slide nearly wiped out the surge that stocks had ridden just a day earlier, in part on hopes that more aggressive moves by governments and central banks around the world could help contain the economic fallout.

These vicious swings are likely only to continue, as long as the number of new infections continues to accelerate, many analysts and professional investors say. The S&P 500 is on track to move more than 2 per cent a fourth straight day, the first time that would have happened since the summer of 2011.

Short sellers, who make money by betting the market will go down, have had a field day amid all the volatility. Research published Wednesday by analytics firm S3 Partners shows short sellers have made $50 billion US from the sell off since it began last week.

Watch the video below for an explainer of how short-selling works:

An animated explanation of how people make money from stocks losing value 0:46

Short sellers have racked up huge gains by betting against the prices of companies like Tesla, Amazon, Visa, Boeing and Delta during the current market uncertainty

“When the markets rebound as the coronavirus effect wanes, we will probably see a pullback in short selling in some of these names as shorts cover to realize their profits,” S3 said.

The growing understanding that the spread of infections may not slow anytime soon is pulling sharply on markets. That pull has taken turns this week with the increasingly worldwide push that authorities are trying to give markets through spending plans and interest-rate cuts.

“It’s been a roller-coaster market in recent days for equity investors, and today we appear to be on the downward leg for that ride,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “What you need is time, and unfortunately that is still going to result in volatility.”

In China, where the number of new infections has been slowing drastically, Shanghai-traded stocks have rallied nearly 12 per cent since hitting a bottom on Feb. 3. They’re just 1.4 per cent below their highest level since the new virus began to spread late last year.

Factories in China are gradually reopening, and a return to a sense of normal life may even be on the horizon following swift and severe actions by the government to corral the virus.

But elsewhere in the world, the mood is much darker. There are about 17 times as many new infections outside China as in it, according to the World Health Organization. Widening outbreaks in South Korea, Italy and Iran are responsible for the majority of new infections.

In the U.S., the death toll climbed to 11 due to the virus. California declared a statewide emergency late Wednesday. Southwest Airlines on Thursday warned its investors that it’s seen a significant decline in demand in recent days and an increase in customers cancelling trips.

“The Western world is now following some of China’s playbook, closing schools and declaring a state of emergency for example, but there is a sense that this is too little, too late,” said Chris Beauchamp, chief market analyst at IG.

Travel-related companies continued to fall sharply on worries that frightened customers won’t want to confine themselves in planes or boats with others. Royal Caribbean Cruises sank 15.8 per ent, Carnival fell 13.2 per cent and American Airlines Group lost 11.1 per cent.

It’s a sharp turnaround from earlier this year, when a resilient stock market kept climbing to new highs on the hopes that the virus may remain contained in China and be just a short-term challenge.

Now that a growing list of companies are warning about how the virus is hitting their sales and profits, investors are left with a lot of uncertainty about just how much economic growth and corporate profits will be affected.

“We could probably drive a metaphorical truck between the upside and downside cases here,” said Jason Pride, chief investment officer for private wealth at Glenmede.

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World shares sink after inflation driven retreat on Wall St – Business News – Castanet.net

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Shares declined in Europe and Asia on Thursday after a broad retreat on Wall Street triggered by worries over the impact of persistent high inflation on corporate profits and consumer spending.

U.S. futures were lower, while oil prices advanced.

Germany’s DAX lost 2% to 13,731.64 and the CAC 40 in Paris declined 1.9% to 6,234.78. Britain’s FTSE 100 shed 1.7% to 3,537.99. The future for the S&P 500 was 1% lower while the future for the Dow Jones Industrial Average sank 0.9%.

The Dow industrials sank more than 1,100 points, or 3.6% on Wednesday, and the S&P 500 had its biggest drop in nearly two years, shedding 4%. That was its steepest decline since June 2020. The tech-heavy Nasdaq fell 4.7%.

The benchmark index is now down more than 18% from the record high it reached at the beginning of the year. That’s just shy of the 20% decline that’s considered a bear market.

“The sentiment in the market is highly negative as traders and investors are largely concerned about an economic downturn and soaring inflation,” Naeem Aslam of Avatrade said in a commentary.

The Federal Reserve is trying to temper the impact from the highest inflation in four decades by raising interest rates. Many other central banks are on a similar track. But the Bank of Japan has stuck to its low interest rate policy and the gap between those benchmark rates of the world’s largest and third-largest economies has pushed the dollar’s value up against the Japanese yen.

Japan reported a trade deficit for April as its imports ballooned 28%. The shift reflects surging energy costs amid the war in Ukraine and a weakening of the yen against the U.S. dollar.

Japan’s exports grew to 8.076 trillion yen ($63 billion) last month, up 12.5% from the previous year, according to Ministry of Finance data released Thursday. Imports totaled 8.915 trillion yen ($70 billion) in April, up from 6.953 trillion yen in April 2021, and the highest since comparable numbers began to be taken in 1979.

The Nikkei 225 in Tokyo lost 1.9% to 26,402.84 and the Hang Seng in Hong Kong dropped 2.5% to 20,120.60. In South Korea, the Kospi shed 1.3% to 2,592.34, while Australia’s S&P/ASX 200 gave up 1.7% to 7,064.50.

The Shanghai Composite index reversed earlier losses, gaining 0.4% to 3.096.96.

On Wednesday, retailer Target lost a quarter of its value after reporting earnings that fell far short of analysts’ forecasts. Inflation, especially for shipping costs, dragged its operating margin for the first quarter to 5.3%. It had been expecting 8% or higher.

The company warned that its costs for freight this year would be $1 billion higher than it estimated just three months ago.

The report comes a day after Walmart said its profit took a hit from higher costs. The nation’s largest retailer fell 6.8%, adding to its losses from Tuesday.

Target and Walmart each provided anecdotal evidence that inflation is weighing on consumers, saying they held back on purchasing big-ticket items and changed from national brands to less expensive store brands.

The weak reports stoked concerns that stubbornly rising inflation is putting a tighter squeeze on a wide range of businesses and could cut deeper into their profits.

Other big retailers also have racked up hefty losses.

The data are not entirely consistent. On Tuesday, the market cheered an encouraging report from the Commerce Department that showed retail sales rose in April, driven by higher sales of cars, electronics, and more spending at restaurants.

Investors worry the Fed could trigger a recession if it raises interest rates too high or too quickly. Worries persist about global growth as Russia’s invasion of Ukraine puts even more pressure on prices for oil and food while lockdowns in China to stem COVID-19 cases worsens supply chain problems.

In other trading, benchmark U.S. crude oil rose 56 cents to $110.15 per barrel in electronic trading on the New York Mercantile Exchange. It dropped $2.81 to $109.59 on Wednesday.

Brent crude, the basis for pricing for international trading, climbed $1.19 to $110.30 per barrel.

The dollar fell to 128.14 Japanese yen from 128.20 yen late Wednesday. The euro strengthened to $1.0481 from $1.0464.

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Gold prices holding at session highs as U.S. existing home sales fall 2.4% in April – Kitco NEWS

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Editor’s Note: With so much market volatility, stay on top of daily news! Get caught up in minutes with our speedy summary of today’s must-read news and expert opinions. Sign up here!

(Kitco News) – The gold market continues to trade near session highs, supported by more disappointing economic data. Rising interest rates continue to cool down the U.S. housing market as fewer consumers purchased home last month, according to the latest data from the National Association of Realtors (NAR).

Existing home sales fell to a seasonally adjusted and annualized rate of 5.61 million units last month, down 2.4% compared to March’s annualized rate of 5.75 million homes, the NAR said on Thursday. Market consensus projections called for existing home sales to fall only slightly to 5.65 million.

For the year, home sales are down 5.9%, the report said.

The gold market has seen some renewed technical buying momentum, which has been supported by weaker-than-expected economic data. June gold futures last traded at $1,842.40 an ounce, up nearly 1.5% on the day.

The U.S. housing sector has faced some challenging headwinds as the Federal Reserve looks to aggressively raise interest rates, which in turn is pushing mortgage rates higher.

“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” said Lawrence Yun, NAR’s chief economist. “It looks like more declines are imminent in the upcoming months, and we’ll likely return to the pre-pandemic home sales activity after the remarkable surge over the past two years.”

Yun noted that the falling sales space is helping to boost the supply of existing homes. The report said that the inventory of homes for sale totaled 1,030,000 in April, representing a 2.2-month supply.

Although sales are down, Yun said that home prices still remain elevated.

“The market is quite unusual as sales are coming down, but listed homes are still selling swiftly, and home prices are much higher than a year ago,” he said.

The report said the median existing-home price for all housing types in April was $391,200, up 14.8% from April 2021.

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Ford recalling 350,000 SUVs due to unexplained engine fires, including some sold in Canada – CBC News

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Ford is asking the owners of 350,000 SUVs from the 2021 model year to take them to dealers for repairs because the engines can catch fire.

Ford says in U.S. government documents posted Thursday that it doesn’t know what’s causing fires in some Ford Expedition and Lincoln Navigator SUVs from the 2021 model year.

2863 of the vehicles were sold in Canada: 2,354 Expeditions, and 509 Navigators.

Owners are being advised to park them outside if possible because engine fires have been reported even when the vehicles were not in use.

Ford has reports of 16 fires under the hood, 12 of which started when the engine was off. One person was burned.

Trying to notify customers

So far it hasn’t developed a repair for the fires, which appear to start at the back of the engine compartment on the passenger side.

Ford says it’s treating the recall urgently and will use apps and mail to notify customers as soon as it develops a list of vehicle owners and addresses.

“We are working around the clock to determine the root cause of this issue and subsequent remedy so that customers can continue to enjoy using their vehicles,” Jeffrey Marentic, general manager of Ford passenger vehicles, said in a statement.

Ford began investigating fire reports on March 24. It says the fires appear to be limited to SUVs built from Dec. 1, 2020 to April 30, 2021. The company says it has no fire reports from vehicles built before or after those dates.

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