MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, DECEMBER 1, 1997 (1)
Tuesday, December 2, 1997
Dow breaks through 8000
Wall Street roared back, with the Dow ending above 8000 for the first time in more than a month as stability returned to Asian markets. Bay Street rose with the financial services sector leading the advance
By THE FINANCIAL POST
The Dow Jones industrial average rose 189.98 points, or 2.4%, to 8013.11. It last closed above 8000 on Oct. 22.
Volume on the New York Stock Exchange was 596.2 million shares, well up from 190.6 million shares traded in Friday's shortened session.
The Nasdaq Composite index climbed 30.17 points, or 1.9%, to 1630.72. The Standard & Poor's 500 composite index rose 19.37 points, or 2%, to 974.77.
Banks, financial services and technology stocks surged as Wall Street tensions about recent currency turmoil in Asia faded, boosted by a rally in overseas markets. Tokyo and Hong Kong stock markets both rose, setting off big gains in Europe.
Investors were also cheered by benign economic news that showed the U.S. economy is on an even keel with inflation in check.
The National Association of Purchasing Management's manufacturing index for November was a lower than expected 54.4 points. Construction spending in October rose by only 0.1%.
J.P. Morgan & Co. (JPM/NYSE) rose US$6 9/16 to US$120 3/4 while Travelers Group Inc. (TRV/NYSE) gained US$3 1/2 to US$54.
Technology stocks rallied impressively, with International Business Machines Corp. (IBM/NYSE) hitting a 52-week high, rising US$3 to US$112 9/16.
Warner-Lambert Co. (WLA/NYSE) plunged US$25 15/16 to US$113 15/16 after the company said U.S. patients taking its Rezulin diabetes drug would require stricter medical monitoring.
The Toronto Stock Exchange 300 composite index rose 111.09 points, or 1.7%, to 6623.87. Volume on the TSE was 100.3 million shares, compared with Friday's 69.2 million.
Canadian investors are being "defensive", said Rolie Bradley, an institutional salesman with Maison Placements Canada Inc. "They are buying the large-cap, interest-sensitive issues which have been highlighted every time the market goes up."
Banks are considered defensive issues because even in times of rising interest rates, they pay steady dividends. The Bank of Canada raised its key interest rate 25 basis points to 4% last week and more increases are expected by investors and analysts.
The major banks all rose: Royal Bank of Canada (RY/TSE) jumped $2.65 to $78.85, National Bank of Canada (NA/TSE) rose $1.30 to $22.35, Canadian Imperial Bank of Commerce (CM/TSE) climbed $2 to $44.65, Toronto-Dominion Bank (TD/TSE) advanced $2.30 to $52.75, Bank of Nova Scotia (BNS/TSE) rose $1.95 to $64.35, and Bank of Montreal (BMO/TSE) climbed $2.85 to $63.85.
Expectations are that Canada's largest banks will report record earnings. Royal Bank reports its fiscal fourth-quarter and yearend earnings tomorrow. National Bank and CIBC follow on Thursday.
Investors also stepped back into technology stocks. "All technology stocks are up in Canada and the U.S. after being sold heavily," said Steve Bokor, a portfolio manager with Majendie Charlton Ltd.
Northern Telecom Ltd. (NTL/TSE) rose $7.90 to $136.50. BCE Inc. (BCE/TSE) rose 70› to $44 and Newbridge Networks Corp. (NNC/TSE) rose $3.60 to $64.30.
The other major Canadian markets closed mixed. The Montreal Exchange market portfolio rose 79.53 points, or 2.4%, to 3374.23. The Vancouver Stock Exchange composite index fell 6.55points, or 1%, to 636.99
The major overseas markets closed higher.
London: British shares raced ahead as an initial surge on Wall Street and a good performance in key Asian markets renewed investor confidence. The FT-SE 100 index rose 90 points, or 1.9%, to 4921.8.
Frankfurt: German shares vaulted the key 4000-point level. The Dax index climbed 118.91 points, or 3%, to 4068.05.
Tokyo: Japanese stocks closed moderately higher, as reassurances that the government is determined to stabilize the financial system sparked buying in financial stocks, which had been heavily sold in recent weeks. The 225-share Nikkei average rose 371.33 points, or 2.2%, to 17007.59.
Hong Kong: Stocks closed sharply higher, lifted by bargain hunting in the finance sector. The Hang Seng index climbed 223.96 points, or 2.1%, to 10750.88.
Sydney: Australian stocks ended higher, boosted by healthy gains in Tokyo and Hong Kong, which raised hopes of increased stability in the region and encouraged bargain hunters. The all ordinaries index rose 48.3 points, or 2%, to 2513.4.
HOT STOCKS
TransCanada takes its turn in the sun
By THE FINANCIAL POST
TransCanada PipeLines Ltd., (TRP/TSE), up 55› to $30.80, on volume of 673,294 Mshares.
Among the pipelines, it was TransCanada's turn yesterday to hit a 52-week high. "It's market money that's looking for a place to hide," said Sam Kanes of Scotia Capital Markets. Some buyers may also be trying to show that they were in on the pipeline rally before yearend reports are prepared, he suggested. TransCanada stock gained $4.10 in November.
Biovail Corp. International (BVF/NYSE), up US$3 1/8 to US$34, on volume of 367,500 shares. The stock hit a 52-week high as buyers anticipated the company will sign a licensing deal for eight drugs it is developing. Another approval from the U.S. Food and Drug Administration is also expected before yearend.
Bishop Resource Inc. (BRI/ASE), down 37› to 53›, on volume of 150,500 shares The shares were halted a week ago after gaining 25› pending release of assay results from the first four holes of a 10-hole program on the Scotia project, 50 kilometres southeast of Prince Rupert, B.C. The market was clearly not excited by the assays, although Bishop said it had staked additional claims in the area. Results for the remaining six holes are expected soon.
Inco Ltd. (N/TSE), up $1.35 to $28.75, on volume of 1.8 million shares. Nickel prices sagged but Inco stock climbed, a clear indication to some observers that the takeover story is driving the market. Rumors that Inco's share price fell so far - it bottomed at $24.25 on Nov. 26 - that the company is a takeover target are all over the Street, but the company's multibillion-dollar pricetag, nickel's uncertain outlook and Inco's takeover defences have generated skepticism. "Somebody might come in with a stink bid," a corporate finance expert said.
Microcell Telecommunications Inc. (MTIb/TSE), down 40› to $8.40, on volume of 97,110 shares. Analyst Steven Salamon of RBC Dominion Securities Inc. began coverage of the personal communications services company with a "reduce" recommendation and a one-year pricetarget of $8.50.
Orbit Oil & Gas Ltd. (ORB/TSE), up 1› to $1.72, on volume of two million shares. There was no news but plenty of volume as investors shuffled their holdings in the wake of a $1.70-a-share takeover bid from Sunoma Energy Corp.
Altair International Inc. (AIL/ASE), up 90› to $20.30, on volume of 19,100 shares. The company said it had hired an investment bank to help it raise additional capital through a private placement.
Shares in the Biomira Inc. (BRA/TSE) fell 45› to $3.55, and (BIOMF/Nasdaq) was down 3/16 at US$2.50. Biomira Inc. is delaying the start of a long-awaited Phase 3 trial for its cancer treatment Theratope, and "redefining" its role in diagnostics. In a four-page statement yesterday, the Edmonton-based company disclosed it will delay the final phase of clinical testing for Theratope, pending further tests of a new formula for the breast cancer drug. Also, it is no longer seeking fast-track approval for Tru-Scint, used to detect breast and ovarian cancer, and may be looking to sell it.
Archangel shares (AAD/VSE) closed at $1.10 yesterday, down 10›. Archangel Diamond Corp. has named a new chief executive and arranged to raise up to US$26.5 million for what it has called a "world-class'' diamond project in Russia. The Vancouver-based company said yesterday Timothy Haddon has agreed to act as president and chief executive. Haddon, who replaces Alex Budzinsky, held a similar post with U.S. resource giant Cyprus Amax Minerals Co. and was co-founder of First Dynasty Mines Ltd., a company in Singapore financier Robert Friedland's stable. Haddon said the money, which is needed to fund exploration and bulk sampling at the company's Verkhotina property, will be raised in stages. "They have found what appears to be a world-class ore body,'' he said.
Ventra Group Inc. shares (VTA/TSE) closed at $2.85, down 5›. Earnings tumbled at auto parts maker Ventra in the fourth quarter after the Cambridge, Ont.-based company took a second restructuring charge for its troubled door handle division. Ventra took a $5.3- million writedown for the quarter ended Sept. 30 to pay for layoffs and the closing of a chrome-plating line. A year earlier, it wrote off $2.4 million at the division and shed a zinc diecast operation. For the three months ended Sept. 30, the company had a net loss of $1.3 million (3› a share) on revenue of $75 million. That compares with a loss of $855,000 (2›) on revenue of $77 million in the fourth quarter of 1996. The quarter includes the traditionally slow summer period.
Lassonde Industries Inc., (MSE/LAS.A) closed at $17.65, up $0.15. The Quebec-based fruit juice maker and distributor, has lifted ownership of its China joint-venture from 47% to 71% by investing in new production equipment and putting up an extra $4.4 million in working capital. Lassonde began making Rougemont juices in China through the joint venture in 1994. Development of the Chinese market will raise consolidated sales by 8% to about $175 million in 1997, the company said.
Fulcrum Technologies Inc.'s (FUL/TSR & FULCF/NASDAQ) stock price closed up 61› at $2.20 in Toronto yesterday and up 7/16 at US$1 1/2 on NASDAQ. Royal Bank of Canada has extended its credit facility to the end of the year. The extension gives the company more time to find a strategic investor or equity partner, a process that should be completed soon, said Eric Goodwin, Fulcrum's chairman and chief executive. He does not expect to have to ask Royal Bank for another extension of the deadline to pay back $26 million in debt. Analysts say the credit facility extension, which originally came due Dec. 1, buys Fulcrum more time to complete its search for a financial savior.
December 1, 1997
Toronto stocks seen facing rough December
Toronto's commodity-driven stock market faces a rough ride amid dropping gold and oil prices and fears of interest rate hikes, but could be rescued by the traditional year-end rally, analysts said on Monday.
Canada's largest stock exchange, whose key 300 Composite Index is heavily weighted in gold and oil issues, has been battered by tumbling bullion and oil prices as it struggles along with Wall Street to recoup losses after a recent correction.
Investors could also be lured from Canadian stocks if Canada's central bank hikes short-term interest rates again to bolster a Canadian dollar, now hovering around 11-year lows.
The Bank of Canada last week raised its key bank rate by 25 basis points to 4 percent.
So far this year, Toronto's key 300 Composite Index has gained 11.8 percent, vs a 23.8 percent jump for the New York Stock Exchange's Dow Jones industrial average.
But Toronto has tumbled 8 percent from the Oct. 8 record high of 7223.42 points. The market rallied on Monday, rising 111 points to 6623.90.
Wall Street has lost only 3.6 percent from its record of 8299.49 points on Aug. 7. It closed up 189.98 points at 8013.11 on Monday.
Toronto's performance "depends whether gold, oil and Canadian dollar can stabilize. If they can, then I think the TSE (Toronto Stock Exchange) will enjoy a cute, little Santa Claus rally," MMS International analyst Katherine Beattie said.
"But if they remain under pressure, which is the risk especially for gold and oil, then I think we are going to continue lower," she said.
Fred Ketchen, director of equity trading at brokerage ScotiaMcLeod, added that "until there is some steadying away in commodity prices, I say that we're going to have a problem."
Gold has weakened at the hands of fund speculation on news that central banks were selling their bullion. Prices have slid to 12-1/2 years lows near $294 an ounce.
Closely watched Nymex crude oil prices fell to $18.79 a barrel on Monday after a 9-month high of $22.76 in early October, on continuing uncertainty in the Middle East.
Analysts are debating whether oil and gold prices have bottomed out.
Midland Walwyn's director of private client investing Dunnery Best said that investors were ready to snap up Toronto's cheap resource stocks and had factored another interest rate hike into the market.
Analysts said Toronto's woes might also be lifted by the traditional Christmas rally, which generally stretches into the new year. The rally traditionally starts as fund managers rearrange their portfolios ahead of year end, and investors begin pouring funds into retirement shelters.
Best said Toronto's gains could then surpass New York's.
"Toronto, if anything, should outperform just simply because of the fact we've corrected much more severely than the U.S. because of the higher preponderance of resource issues," he said.
|
