MARKET ACIVITY/TRADING NOTES FOR DAY ENDING WEDNESDAY, MARCH 11, 1998 (1)
Thursday, March 12, 1998
Bay Street stocks advanced to their third straight record, smashing through the 7300 barrier. Wall Street cyclical issues came through to provide yet more records
The Toronto Stock Exchange 300 composite index rose 49.85 points, or 0.7%, to 7345.84.
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Volume was a heavy 140.9 million shares worth $2.53 billion. Advancers outpaced decliners 558 to 526 with 286 issues unchanged.
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On Tuesday, the TSE 300 stopped just short of topping the important 7300-point mark with a 67.93 point rise to 7295.99.
In New York, the Dow Jones industrial average also added to its record close with a gain of 32.63 points, or 0.4%, to 8675.75.
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The Toronto market has gained 187.24 points, or 2.6%, so far this week.
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Overall, nine of the TSE 300's 14 sub-indexes closed higher, led by a 1.8% rise in the heavily-weighted financial services sector, which accounts for more than 20% of the the TSE 300.
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"People are trying to find some sustainability of earnings and for the most part the banks' first-quarter earnings have been quite reasonable," said Dave Picton, a portfolio manager at Synergy Mutual Funds in Toronto.
The paper and forest products sector notched another jump, gaining 1.8% as takeover fever from Monday's announcement of the acquisition of Montreal-based pulp and paper company Avenor Inc. by U.S.-based Bowater Inc. continued to spur the paper sector. So far this week, the forest group has climbed more than 9%.
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But gold and metals stocks tempered the market's gains as the gold and precious minerals index fell 1.9% and the metals group dropped 1.3%. The April price for Comex gold dropped US$1.40 to US$295.10.
Despite the records in Canada, some observers say the momentum will be hard to maintain.
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Investors seem to be chasing stocks higher instead of buying them based on a fundamental research, said Fred Pynn, director of equity research at Bissett & Associates Investment Management Ltd. in Calgary.
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He pointed out that the TSE 300 is trading above 24 times trailing earnings. In addition, the market is trading at a record high on a price-to-book value basis, while its dividend yield is at a record low.
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The market "seems to have momentum of its own," which could fuel further gains over the short-term, Pynn predicted. Beyond that point, interest rates will need to drop or profits will need to rise for the market to continue to support its lofty valuations, he said. But neither is likely to happen, given the strength of the U.S. economy and the declining trend in corporate profits because of Asia's financial problems.
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In other Canadian markets, the Montreal Exchange portfolio index rose 15.15 points, or 0.4%, to a record close of 3747.21.
The Vancouver Stock Exchange composite index fell 3.63 points, or 0.6%, to 621.14.
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, drug names faded and technology's gains stalled, but stocks of companies in smokestack industries stepped into a leadership role, lifting major market averages to record levels.
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Forest and paper products moved higher and chemical stocks also marked progress in a day dominated by stocks that have largely been left out of the market's recent rallies.
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"The cyclical stocks are moving faster than consumer issues, which is a reverse of yesterday," said Jack Regan, head of derivatives trading at Josephthal & Co.
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But different leaders, same result, at least for most averages. Besides the Dow industrials, also setting record were the Standard & Poor's 500 composite index, which added 4.22 points, or 0.4%, to 1068.47, and the New York Stock Exchange composite index, which gained 2.30, or 0.4%, to 557.30.
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Advancing issues beat decliners, 1,742 to 1,222, on the New York Stock Exchange. Trading was brisk, with 652.3 million shares changing hands on the Big Board versus 631.4 million Tuesday.
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London: The market crept to its third record close of the month. The FT-SE 100 index closed at 5829.8, up 1.3 points.
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Frankfurt: Stocks inched ahead in afternoon trade, with the Dax index closing at 4832.76, down 1.67 points.
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Tokyo: Stocks lost ground as expectations that Japan's economy could worsen were reinforced by a fall in long-term Japanese interest rates to a record low. The Nikkei average closed at 16,756.14, down 226.68 points, or 1.33%.
Hong Kong: The Hang Seng index closed 220.28 points, or 2%, higher at 11,118.85.
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Sydney: Stocks powered to a stronger finish, fuelled by a 3.1% rise in media giant News Corp. The all-ordinaries index closed at 2714.8, up 21.9 points, or 0.8%.
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