TORONTO - It's Christmas week on the markets, but investors will be hardpressed to find much holiday cheer over the next few days.
Though the auto bailout announced late last week is behind us, investors still remain cautious about the economy and many will likely stay on the sidelines when markets resume trading Monday during a holiday-shortened week.
After three days of trading, Canadian markets will be closed Christmas and Boxing Day.
The Canadian market has lost more than 40 per cent of its value since hitting a high above 15,000 in mid-June and market watchers are looking for any sign of a market bottom and eventual turnaround.
However, a lot depends on how investors interpret the latest economic data, now that the corporate financial reporting season in Canada and the United States has taken a breather.
On Monday, the Conference Board of Canada is slated to announce results of its Index of Consumer Confidence, a December survey which could show Canadians consumer confidence at its lowest level since the 1980-81 recession.
Canadians are already becoming more pessimistic about the recession, which threatens to wipe out tens of thousands of additional jobs across the country, from auto parts and assembly plants in Ontario to paper mills in Newfoundland, potash operations in Saskatchewan and mines in northern Ontario and British Columbia.
October real gross domestic product numbers are expected Wednesday.
TD economist Millan Mulraine said the bank expects a decline of 0.3 per cent.
"Much of the weakness in activity can be traced to the continuing slump in commodity prices, though consumer spending has also been ebbing due to the continued destruction of household wealth," Mulraine wrote in a report.
"In the months ahead, with retailing, wholesaling and manufacturing sector activity all expected to weaken further and the U.S. economic recession continuing unabated, Canadian GDP growth should remain in or near negative territory as the economic recession intensifies."
In Washington, the U.S. Commerce Department on Monday releases gross domestic product figures for the third quarter as well as new home sales for November -- providing more signposts about the U.S. recession.
On Wednesday, the Commerce Department releases personal income figures and durable goods orders for November.
Recent economic news in the United States has focused on the future of the big automakers, now breathing a sigh of relief, thanks to the US$17.4-billion bailout loan approved by the Bush administration.
The companies will suddenly have the cash to pay their bills and avert a bankruptcy -- at least for a little while. But the future holds more uncertainty and a massive restructuring of the industry on both sides of the Canada-U.S. border.
"There's a lot of skepticism about how much real reform we're likely to see, particularly at GM," said Alan Gayle, investment strategist at RidgeWorth Investments in New York.
"There is a lot of skepticism about whether GM is prepared to do what needs to be done."
