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Dow throttles Americas
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August 31, 1998: 9:59 p.m. ET
Wall St. bloodbath, Russian decay drive hemisphere's markets down
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NEW YORK (CNNfn) - A 500-point plunge on the Dow Jones Industrial average gave already uneasy financial markets throughout the Western Hemisphere another dose of bad-tasting medicine on Monday as Canadian and Latin stocks alike fell 4 percent or more.
Toronto stocks dropped more than 4 percent as concern over the weak Canadian dollar combined with overseas concerns to further scare already nervous investors.
The Toronto Stock Exchange 300 Composite Index dropped 235.61 points or 4.09 percent to 5,530.70.
"It's all selling out there. What more can I say," said one Toronto-based trader.
The Dow Jones Industrial suffered a worse fate, dropping 512.61 points, more than 6 percent, to close at 7,539.07.
Toronto's decline was a dramatic reversal from the morning's firmer opening, when the TSE 300 opened up 49.15 points, or 0.85 percent, at 5,815.45.
The Toronto market continued to feel the effects of the troubled Canadian dollar, said Todd Kapala, an equities specialist at Priority Brokerage in Toronto.
The currency weakened to C$1.5674 ($0.6379) after opening the North American session at C$1.5600 (US$0.6349).
"The Canadian dollar is one thing that a lot of traders are keeping a close eye on," said Kapala. "It's down a far bit, but nothing dramatic as far as a real crisis is concerned."
Kapala said investors are looking for "a trading range or a bit of stabilization" in the currency before they will feel confident in the domestic climate again.
All 14 of the TSE 300's subindexes were down, led by a 7.18 percent dip in the conglomerates sector and a 4.89 drop in the gold index.
The influential gold and precious minerals index continued to suffer as the yellow metal continues to trade near 12-year lows, although the price of gold on the Comex Division of the New York Stock Exchange closed up US$1.90, to US$279.90.
The banking, metals and oil sectors also showed dramatic declines.
Mexico's IPC stock index fell sharply, down 5.14 percent, taking its cue from Wall Street and higher interest rates.
The index plunged 162.21 points to 2,991.93, crashing through the key psychological barrier of 3,000.
Higher overnight interest rates on government paper also pressured stocks, traders said.
Overnight rates on Mexican Treasury bills, or Cetes, rose as high as to 38 percent in late trading, up 685 basis points from Friday's close on month-end pressures and an upcoming cutoff for commercial banks to settle their balances with the central bank.
Separately, Mexico's central bank said late Monday it had declared its weekly Cetes auction void, the first time it had taken such measures since the Mexican currency crisis in 1994.
Brazilian shares tumbled 4.06 percent, tracking the plunge in the Dow Jones Industrial average, as problems in Russia further unnerved investors, traders said.
Sao Paulo's key Bovespa index of the 58 most-traded stocks closed down 274 points at 6,472. Shares worth 356.04 million reals traded hands, about half of the average daily volume in July.
Losses were kept in check by heavy buying of Telebras, preferred in what traders speculated was government intervention.
"Three big banks were doing heavy Telebras buying trying to sustain the market," a trader at a local brokerage said. "It looks like intervention."
Brazilian share prices have plummeted nearly 40 percent in August, wiping out the gains of the past two years as investors pulled out of emerging markets on fears the crisis in Russia would spread.
"Nothing is happening here, there are just no inflows to emerging markets," a trader at Bozano, Simonsen bank said.
Telebras preferred slipped 4.79 percent to close at 83.50 reals ($70.99). Telebras common led declining shares, tumbling 8.53 percent to close at 59 reals ($50.16).
American depositary receipts (ADRs) of Telebras {TBR) closed at a 52-week low of 71, down 4-1/8.
Venezuelan share prices closed broadly flat in shallow trade, but a plunge in U.S. stocks after the bolsa's close will weigh in tomorrow's session, traders said.
According to preliminary figures, the 15-stock IBC index closed ahead a meager 5.32 points, 0.18 percent, at 2,904.02. Among traded issues, five fell, four rose and 17 closed flat.
"Venezuela is just a too-high-risk investment," said Exterior broker Reinaldo Uribe, commenting on the lack of investor interest in local stocks, which have dropped more than 70 percent so far in 1998. 
-- from staff and wire reports
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