TSX Drops nearly 500 Points Due to Fuel Prices and Mortgage Crisis

by Jordan Yerman | September 10, 2008 at 08:55 am

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The US mortgage quagmire and fluctuating fuel prices have caused the Toronto Stock Exchange to wobble... yesterday, the TSX lost 4%. Though bad for everyday folks, high fuel prices actually tend to boost the TSX, so at the moment you will be unlikely to find Canadians complaining, at least until market instability begins to affect them in other ways.

That performance means that the TSX has lost 1,624 points in the past week and now sits at its lowest point since late January.

"The sentiment is obviously just completely working against the market right now, and no one wants to touch commodities," said Gareth Watson, associate director and Canadian equity adviser at Scotia Capital.

Canada's main stock market tends to benefit when world oil and other commodity prices rise. In recent weeks, however, prices for minerals and energy have been falling, taking the country's equity market lower as well.

The TSX, driven by energy, is partially buoyed today by the performance of Research in Motion (RIM, of Crackberry fame):

Canada's main equity benchmark, which derives more than three-quarters of its value from energy, materials and financial stocks, has lost $142.1 billion (C$152.24 billion) of its value in six trading days this month. It has fallen 19 percent from its June 18 peak.

Research In Motion may gain C$4.24 to C$110.27, bids already submitted in Toronto indicated.