MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, MARCH 2, 1998 (1)
Wednesday, March 4, 1998
Big gains from oil patch and transportation shares pushed the Dow to its fifth-straight record. Bay Street stocks advanced but bank shares slowed the march
U.S. technology stocks suffered a second-straight session of declines, but blue-chip names shone to help the Dow Jones industrial average to its fifth-straight record closing high.
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The benchmark advanced 34.38 points, or 0.4%, to 8584.83.
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The surge came mainly on a late flurry of buying.
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The Standard & Poor's 500 composite index jumped 4.32 points, or 0.4%, to 1052.02.
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The Nasdaq composite index fell 1.4 points to 1757.14.
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About 615.1 million shares were traded on the Big Board, topping Monday's 597 million shares.
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The big gains came from the oil patch and the transportation sector, as US Airways Group (U/NYSE) rallied US$4 9/16 to US$68 1/16, helped by a rating upgrade from Merrill Lynch & Co., while Delta Air Lines (DAL/NYSE) climbed US$31 1/84 to US$116 3/8 and AMR Corp. (AMR/NYSE) shot up US$4 9/16 to US$132 9/16.
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Weakness in the computer sector prevented the session from being a success across the board.
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Compaq Computer Corp. (CPQ/NYSE) fell US$1 6/16 to US$29 11/16 after Merrill analyst Lucianne Painter lowered her earnings estimate for the company's first quarter by US5› a share.
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Dell Computer Corp. (DELL/Nasdaq) fell US$41 1/82 to US$1311 1/88.
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Intel Corp. (INTC/Nasdaq), the world's largest chip maker, fell US$2 5/16 to US$85 5/16.
Orders for computer chips are weak because of excessproduction capacity, inventory reductions by manufacturers that use chips in their products and slowing consumer demand for products containing microchips, Merrill Lynch analyst Thomas Kurlak said in a report.
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Canadian stocks were mixed as concerns interest rates may rise undetermined bank shares.
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The Toronto Stock Exchange 300 composite index rose 24.83 points, or 0.4%, to 7137.93. About 111.6 million shares changed hands on the TSE, up from 107 million shares traded Monday.
Canada's largest banks fell, pulled lower by sliding bonds after U.S. Federal Reserve chairman Alan Greenspan said Asia's slowdown may not have a big impact on U.S. economic growth, raising speculation over the outlook for interest rates.
Bank lending profits slow as higher interest rates raise the cost of borrowing, deterring companies and consumers from taking out loans for large purchases and corporate expansion.
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Toronto-Dominion Bank (TD/TSE) slid 10› to $59.20, Royal Bank of Canada (RY/TSE) jumped 5› to $82.45 and Newcourt Credit Group Inc. (NCT/TSE) fell $1.45 to $66.
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Bombardier Class B (BBDb/TSE) shares jumped $1.40 to $31.40, after the railcar manufacturer won a $2-billion contract from British-based Virgin Rail Group Ltd.
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Optimism that Asian economic problems may be overstated and profits of exporters may grow helped boost stocks like Northern Telecom Ltd. Nortel shares (NTL/TSE), which account for 3.4% of the benchmark index, gained $1.15 to $75.75. ÿBCE Inc. (BCE/TSE) which owns 52% of Nortel, gained 75› to $51.
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Some metal issues gained, led by Alcan Aluminium Ltd. (AL/TSE), up $1.60 to $45, and Inco Ltd. (N/TSE), up $1.35 to $26.40. "Investors are bottom fishing on all the metals," said John Kinsey, a portfolio manager with Caldwell Securities Ltd.
The base-metals group has lost 1836.92 points, or 31%, since reaching a 12-month high of 5891.75 a year ago.
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Other Canadian markets ended mixed.
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The Montreal Exchange portfolio rose 20.67 points, or 0.6%, to 3,657.21.
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The Vancouver Stock Exchange fell 2.4 points, 0.4%, to 630.65.
For a scorecard of trading activity on all Canadian Stock Exchanges, go to:
quote.yahoo.com .
REFERENCE: Canadian Market Summary
canoe2.canoe.ca
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Major overseas markets closed mixed.
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London: British shares fell for the first time in five sessions, with value-seeking investors turning their attention to smaller stocks. The FT-SE 100 index lost 12.9 points, or 0.2%, to 5,807.7.
Frankfurt: Germany's blue-chip Dax index declined on a flat Dow and profit-taking, sliding 20.4 points, or 0.4%, to 4,757.14.
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Tokyo: Japanese stocks closed slightly lower as investors took profits after the market's recent heavy gains. The 225-share Nikkei average closed down 96.01 points, or 0.6%, at 17,168.33.
Hong Kong: The Hang Seng index rose 106.62 points, or 0.9%, to 11,425.46.
Sydney: Australian shares ended weaker. The all ordinaries index lost 13.5 points, or 0.5%, to close at 2,684.4.
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Wednesday, March 4, 1998
First Marathon profit hurt by Bre-X Minerals collapse -- By THE FINANCIAL POST
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First Marathon Inc. said yesterday it suffered a drop in profit last year, which it blamed on falling revenue from its institutional business and a loss in its trading account - partly from the collapse and subsequent delisting of Bre-X Minerals Ltd.
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But the brokerage is pushing ahead with its 14th consecutive annual dividend increase, hiking the payout to 54› a share from 48›.
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"We're very strong financially, we've got a very strong capital base, so I guess the directors felt we could increase the dividend and do so very prudently," said vice-president Michael Walsh. "And you have to put last year's results in context.
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"We had a very strong year the year before and the 1997 results are actually the second best year of earnings we've ever had. Although some areas of the business didn't perform as we'd like, it wasn't a terrible year or anything."
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Net income for the year ended Dec. 31 was $51.4 million ($2.04 a share), down from $58 million ($2.30) in 1996. Investment income was one of the main culprits, dropping 11% to $67.3 million from $75.9 million a year earlier.
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"The decline was chiefly attributable to a reversal in the performance of the company's professional trading account," First Marathon said.
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"The trading account incurred an investment loss of $19.1 million, inclusive of a charge for the use of funds, as compared to a gain of $22.7 million in 1996."
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Walsh said the brokerage lost about $4.5 million on Bre-X.
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Total revenue for 1997 was $256 million as compared to $259 million in 1996. A gain in retail brokerage commissions and strong growth in the revenue from its correspondent clearing unit fully offset a decrease in commissions in the institutional brokerage business, the company said.
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Net income for the final three-months of the year was $10.1 million (40›), compared with $13.9 million (55›) in the same period the year before.
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Bankruptcies make 1997 a record year - By ALAN TOULIN - The Financial Post
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Ottawa - There were more personal and business failures last year than ever before as Canadians posted the most bankruptcies ever, Industry Canada said yesterday.
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Overall, bankruptcies rose to 97,497 in 1997, up nearly 4% from the previous high of 93,860 set in 1996, the federal department reported.
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There was a record number of consumer bankruptcies, with 85,297 people filing for protection from creditors. That's nearly 7% higher than the 1996 figure. Business bankruptcies, however, fell more than 14% to 12,200 from 14,229 in 1996.
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Since 1995, bankruptcies have increased dramatically, rising nearly 24%, despite two years of economic growth. Analysts say the figures may reflect the growing proliferation of credit and greater ease in obtaining it. While 1997 was a record year, the pace of bankruptcies, which tends to trail economic growth, started to fall in the second half.
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This improving trend was evident in December's statistics. During the month, 6,706 people and businesses filed for bankruptcy, down 11% from 7,815 a year earlier.
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The Atlantic provinces were hardest hit. In Prince Edward Island bankruptcies were up 33%, followed by New Brunswick (up 29%), Newfoundland (up 20%) and Nova Scotia (up 15%). In Ontario, bankruptcies rose by 4%, while in Quebec they were up 2.9%. Among the western provinces, British Columbia recorded an 11.9% upswing, while Manitoba saw failures rise 0.7%.
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Alberta and Saskatchewan were the only provinces to see numbers decline - by 4.7% in Alberta and 2.6% in Saskatchewan.
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Stromberg to investigate investor protection - By SUSAN HEINRICH - Mutual Funds Reporter The Financial Post
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Glorianne Stromberg has been hired by the federal government to determine whether investors are sufficiently protected when they buy mutual funds and other investment funds.
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Stromberg, a part-time member of the Ontario Securities Commission, will conduct the review for the Office of Consumer Affairs, a department of Industry Canada.
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Her first critique of the fund industry, the Stromberg Report, released in January 1995, has resulted in many changes in the mutual funds industry.
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Stromberg has been asked to recommend how retail investors can be reasonably protected and what role government can play.
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She says she is excited about the chance to continue the work done in the Stromberg Report.
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"It gives me an opportunity to pursue areas that are beyond the scope of the initial report. For example, an issue that needs to be looked at is RRSPs and are they creditor proof. The answer is not clear."
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Stromberg expects the project to be complete by June 30. "It will take a lot of my time but I am also a part-time [OSC] commissioner and will continue to devote the time needed there."
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She will work, much as on her initial report, "by seeking input from the industry and other knowledgeable people in the area." She has already sent a letter to Tom Hockin, president of the Investment Funds Institute of Canada, requesting his support in the project.
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Stromberg will also attempt to determine whether consumers receive greater protection depending on where they purchase a product and which product they buy.
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Consumer Affairs is interested in any recommendations for helping investors understand the information they are given. "I call it closing the gap between those who know and those who don't know," she says.
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