MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, MARCH 23, 1998 (1)
Tuesday, March 24, 1998
Bay Street found new strength in surging oil shares on news that producing countries would cut output. Wall Street lost ground as transportation issues fell on fears of higher fuel costs
The Toronto Stock Exchange 300 composite index broke through 7500 for the first time, climbing 97.4 points, or 1.3%, to a record 7510.24.
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News that a group of oil-exporting countries had agreed to cut production surprised the market, driving oil prices and oil shares sharply higher.
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But some investors sold banks and other interest-rate sensitive stocks on concern that higher oil prices will spur inflation and lead to higher interest rates.
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"Commodity producers have fallen a long way and the discrepancy between the resource stocks and the rate-sensitive stocks is probably at its widest, so people are saying that now may be the time to make a shift," said Jack Cook, a vice president and portfolio manager at Scotia Investment Management Ltd.
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More than 111.3 million shares changed hands on TSE, up from 100.2 million shares traded on Friday.
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The price of West Texas crude climbed US$1.90 to US$16.51 a barrel on the New York Mercantile Exchange.
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The TSE oil and gas subindex rose 5.8% - its biggest single-day gain in 11 years.
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The subindex of 52 companies had dropped 4.7% this year before the gain, compared with the TSE 300's impressive 10.7% advance.
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Canadian Pacific Ltd. (CP/TSE) rose $1.50 to $44.20, Petro-Canada (PCA/TSE) rose $1 to $25.95, Talisman Energy (TLM/TSE) jumped $3.15 to $45.15, Canadian Natural Resources (CNQ/TSE) rose $3.10 to $30.60 and Renaissance Energy Ltd. (RES/TSE) climbed $1.25 to $30.75.
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Oil prices have fallen as much as 29% since November, when the Organization of Petroleum-Exporting Countries raised its production quota, and demand from Asia slowed. Oil fetched US$22 a barrel a year ago.
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Gold issues were boosted after the price of bullion soared.
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Barrick Gold Corp. (ABX/TSE) rose $1.65 to $28.60, Placer Dome Inc. (PDG/TSE) rose $1.10 to $18.20 and Euro-Nevada Mining Corp. (EN/TSE) rose $1.05 to $23.95.
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Bullion for April delivery climbed US$7.60 to US299.80 an ounce on the Comex division of the Nymex.
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However, the gains were slowed as banks and other rate-sensitive stocks fell.
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Bank of Montreal (BMO/TSE) fell $1.20 to $78.60, Toronto-Dominion Bank (TD/TSE) fell 20› to $63.20 and Royal Bank of Canada (RY/TSE) fell $10› to $85.70.
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B of M and Royal were both downgraded to "neutral" from "outperform" by analyst Nigel Dally, of Morgan Stanley Dean Witter.
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Other Canadian markets rose.
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The Montreal Exchange portfolio rose 46.87 points, or 1.2%, to 3832.22.
The Vancouver Stock Exchange index rose 0.97 of a point, or 0.2%, to 617.
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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U.S. stocks fell, with Southwest Airlines Co. leading the decline in airlines, which could face higher fuel costs after the oil price spike.
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The Dow Jones industrial average fell 90.18 points, or 1%, to 8816.25, after setting records all last week.
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The Standard & Poor's 500 index fell 3.61 points, or 0.3%, to 1095.55.
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The Nasdaq composite index rose 3.35 points, or 0.2%, to 1792.51.
More than 635.8 million shares changed hands on the Big Board, down from 718.8 million shares traded on Friday.
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Southwest Airlines (LUV/NYSE) fell US$17 1/8 to US$28 1/4 and US Airways Group Inc. (U/NYSE) fell US$2 9/16 to US$70 7/8.
Exxon (XON/NYSE) gained US$1 5/16 to US$68 5/8, Schlumberger Ltd. (SLB/NYSE) soared US$4 11/16 to
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US$78 1/4 and drilling equipment firm Smith International Inc. (SII/NYSE) rose US$4 1/2 to US$58 1/8 on the oil price spike.
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Networking, telecommunications and software companies were boosted when Morgan Stanley & Co. analyst Alkesh Shah raised his earnings estimates for Lucent Technologies Inc., saying that demand for telecom equipment should accelerate over the next few quarters. Lucent shares (LU/NYSE) rose US$3 13/16 to US$123 7/8.
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Major overseas stock markets were mixed.
London: British shares failed to sustain an earlier push above the key 6,000 mark, driven by massive gains in oil stocks. The FT-SE 100 index closed down 9.3 points, or 0.2%, at 5947.
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Frankfurt: The Dax index fell 30.23 points, or 0.6%, to 4971.32.
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Tokyo: The 225-share Nikkei average climbed 38.36 points, or 0.2%, to 16,868.83.
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Hong Kong: Stocks closed slightly higher but brokers said worries that the U.S. market was heading for a correction dampened enthusiasm. The Hang Seng index closed up 30.10 points, or 0.3%, at 11,594.33.
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Sydney: The Australian all ordinaries index closed up 4.1 points, or 0.2% at 2779.3.
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