MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING FRIDAY, FEBRUARY 13, 1998 (1)
Saturday, February 14, 1998
U.S. stocks closed broadly lower on concern of slowing profit growth among banks, but the Dow managed to eke out another record close. Canadian stock losses were kept to a minimum by strong golds
The Dow Jones industrial average set its fourth straight record, rising by half a point in a late-day rebound to close at 8370.1.
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The benchmark added 2% for the week, partly on optimism that the Asian economic crisis would not hurt U.S. corporate earnings.
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The Standard & Poor's 500 composite index fell 4.05 points, or 0.4%, to 1020.09 after setting three straight records. It rose 0.8% for the week.
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The Nasdaq composite index dropped 3.92 points, or 0.2%, to 1710.42. It ended the week up 1%.
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On the New York Stock Exchange about 536.4 million shares changed hands, down from 614.6 million shares traded Thursday.
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Banking stocks fell on concern that profit growth will slow this year and the stocks will underperform the market. Citicorp (cci/nyse) fell US$21 1/2 to US$125 13/16, Banc One Corp. (one/nyse) lost US$13 1/4 to US$55 and NationsBank Corp. (nb/nyse) lost 7/8 to US$64 5/16.
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McDonald's Corp. (mcd/nyse) rose US$1 13/16 to US$53, helping the Dow pare its loss.
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McDonald's on Tuesday agreed to buy a stake in World Foods, owner of a chain of Mexican restaurants in Denver, and investors expect that will boost earnings later this year, analysts said.
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Canadian stocks traded in a narrow range, sandwiched between a surge in gold stocks and a decline in the utility and industrial products groups.
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The Toronto Stock Exchange 300 composite index fell 8.67 points to 6972.01, snapping a three-day advance but rising 1.8% on the week.
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About 107 million shares changed hands on the TSE, down from 117.6 million shares traded on Thursday.
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Toronto Dominion Bank (td/tse) rose $2.15 to $61.45, Canadian Imperial Bank of Commerce (cm/tse) jumped 90› to $46 and Royal Bank of Canada (RY/TSE) climbed 15› to close at $83.35.
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BCE Inc. (bce/tse), which at 5.5% has the heaviest weighting on the TSE 300, fell 90› to $47.85. Telus Corp. ended 65› lower at $34.75, after gaining $1.40 Thursday.
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Mitel Corp. (mlt/tse) gained $1.70 to $17.20, Bombardier Inc. (bbdb/tse) rose 50› to $32 and Potash Corp. of Saskatchewan Inc. (pot/tse) climbed $2.10 to $131. Mitel gained after it acquired Plessey Semiconductors Ltd. and related units from Britain's General Electric Co. for US$225 million.
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Thomson Corp. (toc/tse) jumped 95› to $41.20 after earlier touching a 52- week high of $41.40.
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Gold issues, led by Barrick Gold Corp., helped lift the broader market. Barrick (abx/tse) rose 55› to $28.90 as bullion for April delivery climbed US$1.30 to US$300.60 an ounce.
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Claude Resources Inc. announced plans to launch a friendly takeover bid for Madsen Gold Corp., offering one of its shares for every 3.5 Madsen shares. Claude stock (CRJ/TSE) rose 25› to $2.25 and Madsen shares (MGF/TSE) ended 28› higher at 75›.
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Other Canadian markets closed mixed.
The Montreal Exchange portfolio fell 4.27 points to 3611.06. It was up 2.6% on the week.
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The Vancouver Stock Exchange rose 6.91 points, or 1.1%, to 633.95, rising 0.9% for the week.
For a scorecard of trading activity on all Canadian Stock Exchanges, go to:
quote.yahoo.com .
REFERENCE: Canadian Market Summary
canoe2.canoe.ca
Major international markets closed mostly lower.
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London: British shares rose after Lloyds TSB helped to restore optimism over the British banking sector's reporting season. The FT-SE 100 index climbed 29.8 points, or 0.5%, to end at the day's best of 5582.3, but fell 0.8% for the week.
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Frankfurt: German shares fell. The Dax index closed at 4502.48, down 34.35 points, or 0.8%, a rise of 0.1% since last Friday.
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Tokyo: Japanese stocks lost ground as profit-taking sales mounted due largely to concerns over Japan's planned economy-boosting steps, brokers said. The 225-share Nikkei average closed at 16,791.01, down 383.92 points, or 2.2%, a fall of 1.5% since last Friday.
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Hong Kong: A resurgence of regional worries knocked stocks to a sharply lower close and brokers said prices may see a little more downside after hitting a two-month high this week. The Hang Seng index closed at 10,274.6, down 345.43 points, or 3.3%, and down 2% on the week.
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Sydney: Australia's share market ended a quiet session weaker as investors worried about softer Asian markets and a possible pull-back on Wall Street. The all ordinaries index closed at 2653, down 21.3 points, or 0.8%, a fall of 0.1% since last Friday.
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COMMODITY-BASED INDUSTRIES TO LAG SECTORS DRIVEN BY DOMESTIC DEMAND, CIBC
ECONOMISTS SAY
TORONTO, Feb. 13 /CNW/ - Canadian industries driven by continued strength in domestic demand will outperform commodity-based industries hurt by reduced global demand and falling prices in the wake of the Asian crisis, according to the latest projections from CIBC economists.
''Domestic economic factors such as continuing low interest rates, rising employment and strong consumer confidence will have a larger role in Canadian industrial output growth than the maturation of the U.S. economic cycle and decreased demand from Asia,'' said Joshua Mendelsohn, Chief Economist for CIBC. ''Even so, the slower growth in exports will continue to weigh on the Canadian economy in 1999, moderating real output of Canadian industries to about 2.5 per cent.''
CIBC's Outlook for Canadian Industries reports that the strongest industrial performers will be sectors driven by the recovery in consumer confidence. Furniture and fixtures are expected to average growth of 11.5 per cent over the next two years, electrical and electronic products 8.7 per cent and business services 7.7 per cent.
Residential construction, textiles and other household products, retail and wholesale trade will also benefit from the boost in consumer confidence. Other industries driven by high domestic demand are communications services providers, producers of telecommunications equipment, and other electronic products.
Industries that have restructured to take advantage of niche opportunities, such as primary textiles, household and office furniture and major appliances, will also do well. Continued strength in business investment will benefit the non-residential construction industry and fabricated metals, non-metallic minerals, electrical industrial equipment and machinery manufacturers.
However, CIBC also warns that commodity-based industries will see less than the average growth in industrial output. Agriculture, oil and gas, pulp and paper, and transportation equipment will see relatively low growth rates while wood products and metal mining will show actual declines in output.
''There is a real demarcation between industries driven by domestic demand and those which depend heavily on global demand,'' said CIBC Senior Economist Anahid Mamourian.
Canadian metal mining activity will be dragged down 4.2 per cent in 1998 due to the Asian crisis and only a modest recovery is expected next year.
After posting two years of growth in excess of five per cent, the output of wood products will stagnate and then decline by 2.0 per cent in 1999 as U.S. residential construction activity slows and demand from Japan remains weak.
Even though the transportation equipment industry will set a new output record over the next two years, growth will be limited because demand for new vehicles in the U.S. is at a peak.
The prospects for aircraft and parts manufacturing remain good but growth will be constrained by a lack of skilled labour and declining demand from Asia.
Pulp, paper and allied industries will see limited growth due to the severe impact of Asia on market pulp prices, the downgrading of European growth prospects, slower economic growth in the U.S. and only modest domestic capacity expansion.
Following five years of strong performance, activity in Canada's oil patch will moderate in 1998 and 1999 but expanded pipeline export capacity to the U.S. will keep the gas sector in good health.
Lower prices for grains, oilseeds and hogs will dampen prospects in agriculture but the sector will see average output growth of 2.3 per cent over the next two years.
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