MARKET ACIVITY/TRADING NOTES FOR DAY ENDING TUESDAY, MARCH 10, 1998 (1)
North American stocks powered to record levels as Bay Street notched its second straight high. Wall Street traders gobbled up drug issues, consumer products and techs
The Toronto Stock Exchange 300 composite index rose 67.93 points, or 0.9%, to a closing high of 7295.99 after narrowly missing going through a 7300 intraday.
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Advancing issues outnumbered decliners 561 to 498. Trading volume was 117.7 million shares, up from Monday's total of 109.5 million, and trading value rose to $2.14 billion from $2.13 billion.
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"I think we're seeing a follow-through from February [registered retirement savings plan] contributions," noted John Kinsey, portfolio manager at Caldwell Securities Inc. in Toronto.
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In New York, the Dow Jones industrial average rose 75.98 points, or 0.9%, to 8643.12, eclipsing the benchmark's previous record close of 8584.83 established last week.
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In Toronto, investors continued to scoop up resource stocks, betting a recent wave of consolidation in the forest products and aluminum industries is a sign of more tie-ups to come among commodity producers.
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Recent strength in copper prices, a bellwether for base metal prices, and newsprint prices also spurred the buying activity, said money manager Josef Schachter of Schachter Asset Management in Toronto.
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The forest products group led all others, rising 1.81%, followed by a 1.71% gain in the base metals group.
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Next came the banking sector, which finished 1.61% higher. The more conservative RRSP investors bought stocks in this group and the utilities, attracted to the stability of the companies' earnings and the low interest-rate environment, Caldwell's Kinsey said.
Overall, 13 of the TSE's 14 stock groups rose. The energy sector finished lower, ending down 1.05% on the back of weak oil prices.
"It looks like Toronto has broken out," said Irwin Michael, portfolio manager with ABC Funds in Toronto. "A number of shares that were lagging are coming up and there is a subtle shift to resource-based stocks."
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In other Canadian markets, the Montreal Exchange portfolio also recorded a new closing high, adding 41.34 points, or 1.1%, to 3732.06.
The Vancouver Stock Exchange composite index fell 3.86 points, or 0.6%, to 624.77.
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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On Wall Street, other major averages joined the Dow in racking up more records, as banks, drug makers and consumer products all marked progress, and tech stocks once again staged a recovery.
The Standard & Poor's 500 composite index rose 11.94 points, or 1.1%, to 1064.25. The technology-heavy Nasdaq composite index advanced 23.35 points, or 1.4%, to 1748.51 - within reach of its recent closing high.
"Consumer noncyclicals have been doing well recently, particularly in the health-care sector," said Rick Holway, director of trading at Investment Advisers Inc. in Minneapolis. "But the consumer cyclicals have been on the move, too."
Once again, the fireworks went off among the techs. Stocks in the sector rallied into the close as traders who had been betting on another downturn jumped in to cover some short positions.
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Several stocks got back all or most of what they lost in Monday's selloff, when investors were responding to Compaq Computer Corp.'s forecast from late Friday of a coming earnings disappointment.
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Sun Microsystems Inc. (sunw/nasdaq), one of the stocks dragged down with the computer group Monday, rose US$4 21/32 to US$42 7/16 as analysts rushed in with encouraging remarks about the stock.
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Advancing issues almost doubled declining ones on the New York Stock Exchange, 1,928 to 1,005. Trading levels reaching 637 million shares, just ahead of the 623.7 million on Monday.
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Major overseas markets closed mostly higher.
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London: The market scored its second record close this month on the back of gains on Wall Street and a firm performance in British government bonds. The FT-SE 100 closed at 5828.5, up 9.6, or 0.2%.
Frankfurt: The Dax index closed at 4834.43, up 53.60, or 1.2%.
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Tokyo: Stocks closed nearly flat as investors watched for details of economic steps the government is expected to take sometime after the beginning of April. The 225-share Nikkei average closed at 16,982.82, up 10.29, or 0.1%.
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Hong Kong: Prices fell in slim trade as investors eyed developments between Indonesia and the International Monetary Fund. The Hang Seng index lost 95.52 points, or 0.9%, to 10,898.57.
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Sydney: Stocks firmed as a bullish bond market sparked gains among the banks. The all-ordinaries index closed at 2692.9, up 12.2, or 0.5%.
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Canadian economy expected to top G7 in 1998 - By DAVID THOMAS -- Economics Reporter The Financial Post
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Canada is set to outperform the rest of the Group of Seven countries in economic growth this year, after tying the U.S. for top spot in 1997, according to a report made public yesterday by the Conference Board of Canada.
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The pace of growth in Canada and the U.S. is expected to slow, with gross domestic product forecast to expand by 3.2% and 2.9%, respectively, after each managed a red-hot advance of 3.8% last year.
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The slowdown will occur because of a maturing business cycle, Asian market weakness and higher interest rates, said Peter Lok, the board's senior research associate and author of its quarterly outlook on the world's major economies.
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The report forecasts GDP growth in Canada will slow further to 2.8% in 1999, but that would still rank it second among G7 nations after Italy with 2.9%.
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"This deceleration will result from slower growth in the U.S. economy and the impact of higher interest rates domestically," Lok said.
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The Bank of Canada has raised the bank rate 175 basis points since the beginning of last June, taking the key overnight lending rate from 3.25% to 5%.
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The bank laid out plans last spring to raise rates slowly but was pushed to act more aggressively because of a tumble in the C$, which it said added an "inappropriate" amount of stimulus to a strong economy.
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The board did not forecast further rate increases in Canada but said the country would feel the effects of an interest rate rise of at least 25 basis points in the U.S., forecast for the third quarter.
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"As the U.S. economy slows, exports of Canadian goods and services will be held back." Continued weakness in the C$ will offset some of the slack in U.S. demand.
If the Asian crisis eases earlier than expected, the U.S. Federal Reserve may have to raise rates even more aggressively, Lok added.
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That outlook has some allies in the Canadian economic community, including Scotia Capital Markets, which forecasts stronger inflationary pressure to occur on 1998 GDP growth of 3.6% in Canada and 3.1% in the U.S.
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But others are expecting U.S. growth to slow more rapidly, prompting a rate decrease rather than an increase.
Economists at Nesbitt Burns Inc. in Toronto have joined leading U.S. forecasters at Deutsche Morgan Grenfell Inc. and Merrill Lynch & Co. in expecting a cut in U.S. interest rates in the second half.
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While the downturn in Asia would be severe enough to kill inflation on this side of the Pacific Ocean, the outlook remains "grim," with a recession forecast for Japan, Lok said.
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"The Asian crisis will act as a brake on Canadian exports to the region through both the stronger C$ and weaker demand."
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