TELETRADER News
6/2/2016, 4:35 PM (Source: TeleTrader)
more TeleTrader news

Canada faces housing bubble

Trading day in Canada started with caution on Thursday, in tune with the atmosphere seen on the Wall Street, where all major indexes fell at the open. Oil prices were sliding as another meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Austria failed to settle rules and levels of production. Canada is not an OPEC-member, but is a significant producer and exporter of oil. Movements in oil prices and other commodities have a huge influence on the economy of over 36 million people and closely connected to its southern neighbour, the United States of America.

The Toronto's S&P/TSX Composite index recovered previous losses and added 0.15% to 14,084 points, some 45 minutes into the trading session. Expectedly, the leading losers were energy companies: Total Energy Services Inc. lost 4.72%, Calfrac Well Services Ltd. followed down 3.20%, and Paramount Resorts lost 2.70%. On the gaining side were TheraTech up 6.27%, Redknee Solution rose 4.88% and Canaccord Genuity added 4.40%, while Valeant Pharmaceuticals climbed 2.90%.

The Canadian dollar fell 0.28% against its main counterpart, the U.S. dollar, and dropped 1.10% versus the Japanese yen. The loonie was 0.12% weaker compared to the euro by 4:22 p.m. CET.

On the side with commodity prices, there is another crisis looming in Canada. The government in Ottawa said it was prepared to take further action against skyrocketing home prices in Vancouver and Toronto. This run into stiff opposition on Toronto's Bay Street, the financial and business center of the country. Authorities in Ottawa have already increased the minimum down payment required for homes costing more than CA$500,000. Those changes appear to have made little, if any, effect on prices in the two main property markets. Chief executive officers of National Bank and Scotiabank have urged for yet another increase of amount of money a homebuyer must pay up front.

The government also received support from the Organization of Economic Cooperation and Development (OECD), which said that so-called macro-prudential measures should be "tightened further and target regionally."

Breaking the News / ZR