MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, FEBRUARY 10, 1998 (1)
Wednesday, February 11, 1998
Wall Street stocks surged to a new closing peak on optimism corporate profits will grow strongly despite the recent Asian economic crisis. Bay Street advanced as confidence in the economy grew
The Dow Jones industrial average rocketed up 115.09 points, or 1.4%, to 8295.61, breaking its previous record close of 8259.31 set Aug. 6.
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The Standard & Poor's 500 composite index rose 8.27 points, or 0.8%, to a record high 1019.01.
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The Nasdaq composite index gained 18.61 points, or 1.1%, to 1709.04, within striking distance of its Oct. 9 closing peak of 1745.85.
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More than 648.7 million shares changed hands on the New York Stock Exchange, up from 529.1 million shares traded on Monday.
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Goodyear Tire & Rubber Co. and International Business Machines Corp. led the Dow's charge.
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Lower sales in Asia will be offset by a growing economy and low interest rates at home, traders said.
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"Earnings are coming through," said George Cohen, chief investment officer at Cohen, Klingenstein & Marks. He said corporate profits are likely to benefit as declining interest rates trim borrowing costs.
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While concern lingers that Asia's slowdown could hurt U.S. profits, the market's overall direction is higher, investors said.
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Many portfolio managers are reassured that companies like American International Group Inc., an insurer that garnered 38% of its revenue from Asia in 1996, still managed to beat earnings expectations.
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AIG shares (AIG/NYSE) rose US$11 1/82 to US$114 15/16 after it said gains from financial services offset slower growth in premiums caused by plunging Asian currencies.
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Semiconductor stocks surged. LSI Logic Corp. (LSI/NYSE) climbed US$21 1/84 to US$27, Texas Instruments Inc. (TXN/NYSE) gained US$21 1/88 to US$553 1/84 and Intel Corp. (INTC/NASDAQ) rose 7/16 to US$861 1/84.
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IBM (IBM/NYSE), which lost 12% in early December amid concern that the Asian fallout would hurt profit, rose US$27 1/88 to US$1007 1/88. Goodyear (GT/NYSE) climbed US$35 1/88 to US$687 1/88.
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Canadian stocks rose, led by banks and utilities like BCE Inc. as confidence grew that the Canadian economy is growing at a sustained, non-inflationary pace.
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The Toronto Stock Exchange 300 composite index rose 34.63 points, or 0.5%, to 6881.49 with Bank of Nova Scotia and BCE accounting for more than a quarter of the advance.
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More than 102.8 million shares changed hands on the TSE, up from 95.3 million shares traded Monday.
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Bank of Nova Scotia (BNS/TSE) climbed 95› to $34.05, Canadian Imperial Bank of Commerce (CM/TSE) rose 70› to $42.95 and Toronto-Dominion Bank (TD/TSE) gained 25› to $57.60.
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Utilities, which also compete with bonds and other fixed-income securities for investors' attention because both pay steady dividends, also advanced.
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BCE (BCE/TSE) climbed 60› to $48.75, Teleglobe Inc. (TGO/TSE) gained $1.50 to $49.50 and Call-Net Enterprises Inc. (CNb/TSE) jumped $1 to $20.50.
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Newbridge Networks Corp. continued its recovery from a recent slump. The shares (NNC/TSE) gained $1.35 to $31.10. Rival Northern Telecom Ltd. (NTL/TSE) gained 50› to $67.10.
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Suncor Energy Inc. (SU/TSE) gained 90› to $50.60, Alberta Energy Co. (AEC/TSE) rose 50› to $31.40 and Talisman Energy Inc. (TLM/TSE) rose 35› to $41.50 as investors await further developments in a standoff between Iraq and the U.S. over weapons inspections that could flare into a military conflict. Any military action in the Gulf could provide oil prices with a big boost.
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Barrick Gold Corp. (ABX/TSE) fell 45› to $28.35 as the price of bullion on the Comex division of the New York Mercantile Exchange slipped US60› to US$301.20 an ounce.
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Other Canadian markets ended mixed.
The Montreal Exchange portfolio rose 23.43 points, or 0.7%, to close at 3550.82.
The Vancouver Stock Exchange ended virtually flat, falling 0.2 points to close at 631.01.
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 ended mixed on the day.
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London: Britain's FT-SE 100 index rallied in late trade, closing at 5613.3, up 12.4 points or 0.2%.
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Frankfurt: German shares rose in late trade but could not overcome an early selloff. The Dax index closed at 4523.75, down 39.8 points or 0.9%.
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Tokyo: Japanese stocks ended flat as gains in property issues and low-priced shares were offset by profit-taking of global blue chips. The 225-share Nikkei average closed at 17,205.09, up 0.09 points.
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Hong Kong: Stocks closed largely unchanged after spending most of the day weaker. The Hang Seng index closed at 10,859.67, down 13.48 points.
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Sydney: Australian shares ended broadly weaker in thin trade after investors took profits from Monday's rise in the absence of support from overseas markets. The all ordinaries index closed at 2668, down 17.3 points or 0.6%.
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Alcan, Hydro-Quebec sign agreements
MONTREAL (CP) - Alcan Aluminium announced Tuesday it has signed a long-term contract to buy a 350 megawatt block of energy from Hydro-Quebec.
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Alcan spokeswoman Margo Tapp said the contract will make it possible for Alcan to go ahead with the construction of a $1.5-billion smelter in Alma, Que., although the company has not yet made its decision to proceed.
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Alcan estimated it will pay $2.2 billion to Hydro-Quebec over a 22-year contract for the energy.
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Under a second agreement signed at the same time, Alcan has agreed to make available to Hydro-Quebec up to 750 megawatts in generating capacity from its own hydro installations in the region.
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Part of this capacity will be available immediately and enable Hydro-Quebec to meet its winter peak power demand.
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The value of this contract to Alcan over 22 years amounts to $600 million, in 1998 dollars.
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High-tech tags would flag insiders --- By Andrew Willis (G&M)
TERRY Matthews and Michael Cowpland became poster boys for Canada's high-tech prowess when their companies' fortunes soared. If hard-hit investors in Newbridge
Networks and Corel Corp. have their way, the pair may unexpectedly find their personal trading causing a change in the way those stock sales are reported.
As detailed last week, Mr. Matthews and Mr. Cowpland both shocked investors by either clearing out stock or contemplating a sale ahead of negative earnings news. Lax securities regulations mean it can take up to 40 days for an insider's trades
to be reported in Ontario. Because of that, the interest in selling on the part
of the Newbridge and Corel chief executive officers wasn't in the public domain until after the bad news had ravaged the stocks.
In Mr. Matthews' case, the Newbridge CEO told the Ontario Securities Commission he might sell up to 300,000 shares. That was just before the market found out third-quarter earnings would disappoint. The warning about earnings trimmed $1.5-billion of the company's market capitalization in a single session. Mr. Matthews never actually sold the shares.
Over at Corel, Mr. Cowpland sold $20.5-million worth of shares in August, just before disappointing sales results torpedoed the stock in September. Investors found out about his stock transactions in early October.
Dozens of investors with knowledge of technology and an axe to grind have called and written to say such a time lag shouldn't exist. The common solution they propose is to electronically tag an insider's stock holdings.
The idea is that when an officer or director buys or sells, the tag would light up as the transaction was reported on a stock exchange. To make a permanent electronic record of the trades, all of a company's insider buying and selling could be filed at the end of each session through a system such as SEDAR, a service that already carries Canadian corporations' financial information.
"I can foresee a time when you ask your broker for a quote and he can give you a report that the bid-ask is $12.45-$12.50 and 427,000 shares have traded and 12,000
insiders' shares were bought or sold by J Smith," Bill Jackson predicted in a E-mail message.
Mr. Jackson added that he is a director at a small mining company, Davidson Tisdale Ltd, and said: "I would have no objection to such a system, nor can I see any insider who is honest having any objections." Much has been made of Vancouver City Savings and Credit Union's venture into branchless banking via Citizens Bank of Canada. It's worth noting that the extensively marketed electronic banking network is linked to a growing money management firm.
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Ontario says on track to meet fiscal targets
TORONTO, Feb 10 (Reuters) - Ontario Finance Minister Ernie Eves said on Tuesday the provincial government is on track to meet all fiscal targets, including a balanced budget by 2000-01.
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Eves told a legislative committee set up for pre-budget consultations that Ontario's deficit forecast for 1997-98 is now C$5.2 billion, down from C$1.4 billion from the budget plan and C$430 million from the second-quarter outlook.
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"For the third straight year, Ontario is on track to better its deficit target, and the province will balance its budget in 2000-01," the finance ministry said in a statement.
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Eves said Ontario's real economic output rose by 4.4 percent in 1997, up from a 3.2 percent forecast in 1997.
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"Ontario's economy is growing faster than the rest of Canada and faster than any of the G-7 nations," Eves said.
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Strong growth in personal income tax and corporate tax revenue boosted the province's revenue. Eves said revenue grew faster than projected, by C$2.4 billion over the budget plan and up C$525 million from the second-quarter level.
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He said the C$650 million reserve, designed to protect against unforeseen economic risks, would not be needed and was applied directly to debt reduction in the second quarter.
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Eves said that "though we should all take pride in these achievements, there is a mountain of debt that we have not yet addressed."
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The province is paying more than C$9 billion annually to service the debt. "These debt costs must be brought down and the best way to do this is by continuing to strengthen the economy, improving the environment for jobs and growth and controlling spending," Eves said.
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