MARKET ACITIVITY/TRADING NOTES FOR DAY ENDING THURS., MAY 7, 1998 (1)
Courteous Of Kerm's Korner (Daily Canadian Market Review) Subject 10229
MARKET VIEW
Canadian stocks lost ground for a third straight day led by.gold and bank shares
''It's a continuation of the lows we've seen over the last few days,'' said equities trader Dave Lawson at Maison Placement Canada. ''The market needs a breather.''
The Toronto Stock Exchange 300 composite index fell 66.17 points, or 0.9%, to 7612.52. About 93.6 million shares traded on the TSE, down from 106.7 million shares traded on Wednesday. Almost all of Toronto's 14 sub-indexes shed points led by heavyweight golds, off 2.6 percent on weaker bullion prices and metals and minerals, down 1.7%. Declines outnumbered advances 645 to 376 with 313 unchanged in trading of 93.6 million shares worth $1.68 billion.
Toronto's stock market slid deeper into negative turf at Thursday's opening as investors pulled back from almost all sectors and especially key golds. Other losing sectors included; communications down 1.3 per cent transportation & environmental down 1.2 percent, pipelines down 1.1% and paper and forest products down 1.0%.
Only one of the 14 TSE index group rose: consumer products gained 0.42 per cent.
The gold and precious minerals subindex and the financial services subindex accounted for 22 points of the benchmark TSE 300's decline.
The gold price "went through $300 like a hot knife through butter," said Fred Ketchen, chief equities trader at ScotiaMcLeod in Toronto. "It got no resistance at all," he added. "Some people are concerned as to where the heck this thing is headed."
Barrick Gold Corp. (abx/tse) fell 85› to $30.75 and Placer Dome Inc. (pdg/tse) slipped 45› to $20.10 as the price of bullion fell US$1.80 to US$298.70 an ounce on the Comex division of the New York Mercantile Exchange. "Gold falling below US $300 an ounce does not bode well for the profits of producers," said Philip Strathy, a portfolio manager with Strathy Investment Management Ltd.
Canadian Imperial Bank of Commerce (cm/tse) fell 30› to $49.60, Bank of Montreal (bmo/tse) lost 35› to $76.45, National Bank of Canada (na/tse) dropped 60› to $29.50 and Bank of Nova Scotia (bns/tse) slid 85› to $37.55. Royal Bank recorded the only gain in the sector, rising a nickel to $84.00.
Leading the transportation index down was scrap metal recycler Philip Services Corp. wo suffered its biggest single day decline since Jan. 27, after announcing lower than expected profits and a management reshuffle. Philip shares (phv/tse) dipped 17% OR $1.95 to $8.85. It was the third most actively traded stock with 1.6 million shares changing hands, compared with a three-month daily average of 279,300 shares. Philip unveiled an unexpected first quarter loss of $565,000 which worked out to nil losses a share compared to last year's earnings of $6.4 million or $0.09 a share. Co-founders Allen and Philip Fracassi also resigned their posts and former Chief Operating Officer Felix Pardo took on the chief executive and president roles.
Northern Telecom Ltd. (ntl/tse) fell $2.40 to $87.60 over Asian concerns. BCE Inc. (bce/tse), which owns 51.7% of Nortel, lost 60› to $61.75.
Other Canadian markets closed lower. The Montreal Exchange portfolio fell 37.42 points, or 1%, to 3810.12. The Vancouver Stock Exchange slipped 1.35 points, or 0.2%, to 628.81. The Alberta Stock Exchange combined value index gained 11.14 to 2337.74 with 446 issues traded; 166 advances, 163 decliners and 117 unchanged.
Wall Street lost ground as investors awaited today's key employment numbers.
Analysts said investors are concerned that today's monthly employment figures will show an expanding U.S. job market that could force interest rates higher.
The market's decline overshadowed a rally in auto stocks after Germany's Daimler-Benz AG agreed to buy Chrysler Corp. for US$43 billion, or US$62 a share.
The Dow Jones industrial average fell 77.97 points, or 0.9%, to 8976.68.
The Standard & Poor's 500 index dropped 9.78 points, or 0.9%, to 1095.14.
About 586.4 million shares changed hands on the Big Board, down from 600.2 million shares traded on Wednesday.
The high-tech heavy Nasdaq composite index declined 21 points, or 1.1%, to 1835.68, as Microsoft Corp. slid for a sixth day on speculation the U.S. Justice Department may block the release of its new operating system, Windows 98.
Microsoft shares (msft/nasdaq) slid US$3 to US$83 3/8.
Chrysler (c/nyse) rose US$4 11/16 to US$53 1/2 on volume of 29 million shares, making it the most active stock the NYSE.
Daimler-Benz's American depositary receipts (dai/nyse) fell US$2 3/16 to US$106.
Walt Disney Co. (dis/nyse) fell US$5 3/16 to US$119 as Goldman, Sachs & Co. analyst Richard Simon lowered his 1998 and 1999 earnings estimates for the entertainment company, though he still recommends buying Disney shares.
Chemical companies slumped after DuPont Co. president and chief executive Charles Holliday said the company's target to increase earnings 10% a year will be a "particular challenge" in 1998 because of weak Asian economies and declining prices for some chemicals.
DuPont (dd/nyse) fell US$2 to US$73 7/8, Monsanto Co. (mtc/nyse) slid 1/2 to US$53 1/8 and Dow Chemical Co. (dow/nyse) lost 13/16 to US$97 1/16.
America Online Inc. (aol/nyse) rallied US$3 13/16 to US$89 11/16 after the No. 1 online service reported higher than expected profit in its fiscal third quarter, boosted by strong subscriber and revenue growth.
Major overseas markets closed lower.
London: British shares lost ground amid concern over U.S. employment figures being released today. The FT-SE 100 index fell 54.4 points, or 0.9%, to 5938, having earlier touched an intra-day low of 5,899.4 before rebounding somewhat. Dealers said selling pressure had been relatively light and had been mostly been confined to financial and pharmaceutical stocks.
Frankfurt: The electronic Xetra DAX index dropped nearly 2 percent with Daimler-Benz AG almost the only bright spot, hitting a record high in the morning and closing some 6 percent higher. The Xetra shed 99.73 points, 1.89 percent, to 5,164.89. Earlier, the floor DAX closed down 43.57 points, 0.83 percent, at 5,186.23. Despite the decline in German shares, all eyes were on Daimler-Benz following news that it will merge with Chrysler, the third-biggest car maker in the United States. Daimler-Benz advanced to a record high of 217 marks before shedding much of its gains, closing up 6.60 marks, or 3.41 percent, at 200 marks. Daimler's previous life high was 198 marks. "It's very good news for the shares. However, you have to expect to see profit taking," one trader said. "Analysts are saying the share could go up as high as 220 or 230 marks. It's possible if the market plays along." Other car shares were buoyed by the news. Volkswagen AG, Europe's largest carmaker, advanced seven marks to 1,448 but rival BMW AG fell 94 marks to 1,966.
Paris: French stocks also tracked losses on Thursday, with the blue-chip CAC 40 index ended down 1.04 percent, dropping 41.09 points to close at 3,906.36.
Hong Kong: The key index in Hong Kong plunged through a critical support level of 10,000 points. Growing tensions in Indonesia, coupled with a threat of strikes in South Korea and concerns about a rate increase in the United States, all helped drag the market sharply down, dealers said. Share prices plunged for the fourth consecutive session, with the key index ended at its lowest level since January. The blue-chip Hang Seng Index dipped below 10,000 when the market opened, losing more than 250 points at one point during the morning session. It recovered some lost ground in the afternoon to end at 9,971.93 points, down 1.4 percent, from the previous close. "There is a fear that interest rates might go up in the U.S. Besides, the continuing situation in Indonesia worries people a lot,' said Sean Li, a trader at Amsteel Securities (Hong Kong) Ltd.
Tokyo: In Japan, the region's economic turmoil and the weak outlook for Japanese corporate earnings also sent share prices lower for the third consecutive day. The benchmark 225-issue Nikkei Stock Average shed 0.66 percent, closing at 15,143.03. On top of a 40.16-point fall on Friday, it shed 357.26 points, or 2.29 percent, on Wednesday. Japanese financial markets were closed Monday and Tuesday for national holidays. "The market is heading to test its lows at the bottom of the 14,000 range," said Jason James, strategist at HSBC James Capel Securities.
Seoul: Share prices in South Korea closed up in what analysts saw as a rebound from recent sharp falls. The key index closed up 3.24 points at 379.47.
Singapore: Share prices also plunged soon after the stock market opened, reacting to a free fall in the region's currencies and overall worsening sentiment on Asia, but rebounded later in the session, dealers said. The key index shed 1.4 percent to close at 1428.67. It had slipped below the key 1,400-point support to 1,399.61 in early morning trade.
Jarkarta: Despite the escalating violence, share prices on the Jakarta Stock Exchange rebounded sharply, with the key index soaring 5.3 percent to 436.778 points, following its 4.7 percent plunge Wednesday. Looting and unrest continued for the fourth consecutive day in the north Sumatran city of Medan, Indonesia, but cooled slightly as security forces patrolled the city. Dealers said the rally was driven by arbitrage buying in telecommunications stocks and did not indicate a turnaround. But the rupiah continued to fall, adding to the 11-percent drop on Wednesday, despite the central bank's move to increase interest rates by between 4 and 12 percentage points. In late trading, the rupiah was trading at 9,720 to the U.S. dollar compared with its close Wednesday 9,000.
Malaysia: The ringgit continued to recover lost ground against the dollar late Thursday from earlier in the day following the release of a higher trade surplus for March, traders said. Faster growth in the country's exports resulted in Malaysia's trade surplus increasing in March to 3.72 billion ringgit compared with 2.51 billion in February, the government said Thursday. Share prices in Malaysia also finished higher on a technical rebound after slumping earlier in the day, and analysts said it was the stronger ringgit that boosted investors' confidence. The Composite Index ended up 2.21 points at 586.83, after hitting an intraday low of 562.91 points Thursday.
Bangkok: Thai stock prices ended slightly higher as local bargain hunting among oversold blue chips, dealers said. The key index gained 0.15 percent to end at the day's high of 393.95.
Taipei: Taiwan shares ended lower as concerns over regional economies and a sharp fall in the New Taiwan dollar drove more investors to the sidelines and sapped liquidity from the market, analysts and traders said. The key index closed 35.27 points lower to 8,290.37.
Manila: Philippine stocks tumbled, also on unrest in Indonesia. The key index fell nearly 1 percent, to 2,189.97, adding to Wednesday's 2.5 percent loss.
Sydney: Australian share prices closed lower, despite a rally in late trading on the strength of National Australia Bank's half-year results, dealers said. The key index plunged 7.2 points to 2,761.0.
Wellinton: The key New Zealand finished down but off its lows on an increase in short-term interest rates and weaker overseas share markets, brokers said. The index closed down 10.06 points at 2,220.55.
World Markets As Of This Moment cnnfn.com
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