MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING TUESDAY JULY 07, 1998 (4)
MORNIING UPDATE
Toronto Stocks Open Up On U.S. Markets
Toronto stocks opened higher on Wednesday on the strength in U.S. equities markets but gold weighed on the index.
''The market's pretty light. It's an event market where you get news on a company and it triggers and it drags other companies up in the sector,'' ABC Funds portfolio manager Irwin Michael said.
The Toronto Stock Exchange 300 Composite Index rose 5.75 points or 0.07 percent to 7460.50 points. Opening volume was light at seven million shares worth C$111.5 million. Gains edged out declines 212 to 203 with 178 issues unchanged.
August COMEX gold fell $2.70 to $293.20, dragging Toronto's heavily weighted gold and precious metals subindex down 2.18 percent. Seven of 14 subgroups were up.
Gold eased in European spot trade on news that gold will make up 15 percent of the new European Central Bank's planned 39.5 billion Ecus (US$43 billion) reserves.
The bank also said members were free to chart their own course on future gold sales and were not constrained by the 15 percent level.
The sell-off was attributed to disappointment that the ECB had not mentioned any freeze on central bank sales by European countries nor made clear how reserves would be managed.
* Geac Computer Corp. Ltd. (GAC.TO) was the top net loss leader, down C$5.50 at C$44.50 despite posting solid fourth quarter earnings. Geac reported a fourth quarter profit of C$0.82 versus C$0.33 in the year-ago period.
* Philip Services Corp. (PHV.TO) dropped C$0.60 to C$5 after touching a new low of C$4.75. It was the second most actively traded at the open with 1.37 million shares changing hands.
* Hyal Pharmaceutical Corp. (HPC.TO) led the most actives down C$0.77 to C$1.96 as 1.86 million shares changed hands. The company issued a statement on Tuesday saying it was not sure why trade in its shares was so heavy.
Asia: Great Expectations
HK gains 2.19 percent on yen, bank rates; tax-cut optimism fuels Tokyo
Anticipation of permanent tax cuts was the buzz that buoyed Tokyo stocks Wednesday, while news of a stronger yen and lower interbank rates sent Hong Kong shares soaring 2.19 percent.
But Singapore stumbled in late day trade as news from the much-awaited evening press conference with Japanese Prime Minster Ryutaro Hashimoto failed to turn investors attention away from domestic economic concerns.
Tokyo stocks closed higher on Wednesday as speculation mounted that Prime Minister Ryutaro Hashimoto would announce permanent tax cuts at an evening news conference, traders said.
The benchmark Nikkei 225 average rose 114.69 points, or 0.70 percent, to 16,530.97.
Hashimoto, stumping for his ruling Liberal Democratic Party ahead of elections for Japan's Upper House of Parliament on Sunday, was to meet reporters Wednesday evening in Nagoya, central Japan.
Talk of tax cuts, which market analysts say are needed to boost the economy, was fueled by a Yomiuri Shimbun article saying Hashimoto may announce the cuts at the gathering.
Hashimoto has sent the market mixed signals, saying he was misunderstood after comments he made last week were interpreted to mean he was ready to adopt tax cuts.
"We're in a stop-go pattern as to whether there will be an early announcement on tax cuts," said Coen Kluyver, general manager at ING-Baring Securities. But he said the combination of earlier fiscal stimulus, the recent "bridge bank" scheme and tax cuts would spur market optimism.
The broader index, as well as blue-chips, were pushed higher. So, too, were Internet-related shares, which benefited from a recent rally in New York.
By sector, real estate and sea transportation were the biggest gainers, while fisheries and communications issues fell.
Despite the enthusiasm, some cautioned that the market could be vulnerable if Hashimoto doesn't come through with a strong enough pledge for lower taxes.
"People have been buying this market up on speculation of a tax cut," said Michael Wilkins, a dealer at Credit Lyonnais. "There's always the possibility of them selling the fact."
Volume was modest with 500 million shares changing hands, down from Tuesday's 544 million. Decliners outpaced gainers 653 to 510 with 125 unchanged.
Hang Seng rides wave of rising yen
Hong Kong stocks closed sharply higher on Wednesday on the back of a stronger yen and lower interbank rates, but trade was thin as the market waited for clues to the direction of the Japanese currency, brokers said.
The Hang Seng Index rose 185.00 points, or 2.19 percent, to 8,629.18. Turnoverremained lackluster at HK$3.46 billion against Tuesday's HK$2.95 billion.
"Investors are waiting to see the outcome of what will happen to the yen," said David Williamson, director at Indosuez W.I. Carr.
"They will not know that until next week because the Japanese elections are going to be this weekend."
The Japanese yen hovered below 139 against the U.S. dollar.
Sentiment was boosted by lower interbank rates as the benchmark three month HIBOR rate dropped to 8.26736 percent at Wednesday's fixing against 8.92500 percent at the same time on Tuesday.
China plays lagged and the China-Affiliated Corporations Index ended up 0.09 percent at 855.51 while H shares climbed 1.79 percent to 430.41.
Hashimoto fails to impress Singapore
Singapore shares ended lower on Wednesday as Japan Prime Minister Ryutaro Hashimoto's eagerly awaited comments on permanent tax cuts failed to impress, dealers said. While Japan's market had closed by the time Hashimoto spoke, Singapore's market had not.
The Straits Times Industrials Index ended at 1,107.78, down 7.40 points, or 0.66 percent.
They said concerns over Singapore's economic health after Prime Minister Goh Chok Tong's warnings of a possible recession in 1999 took center stage.
"It seems like domestic economic slowdown concerns are overshadowing Japan for the moment. People are looking at domestic factors," said a dealer with a local bank.
Barely 30 minutes before the Singapore market closed, Hashimoto told a news conference in Nagoya he wanted to carry out income tax cuts starting in 1999, quashing speculation over his tax reform plans.
Hashimoto said the government would implement tax cuts the public would support.
He said that now was not the proper "environment" to lower the minimum taxable income rate, a move that would force many lower income earners onto the tax rolls.
"The market is a strange one. For several days it was looking for permanent tax cuts in Japan. Now that it is out, it says tax is not the only issue facing Japan. It demands more," said a dealer with a foreign institution.
Hashimoto's remarks triggered a knee-jerk rise in the yen but made no impact on the Singapore dollar, which hovered around 1.69 level against the dollar.
Banks and property shares, usually seen as proxies for the Singapore economy's health, came under some late selling pressure.
Sydney pares Tokyo-led highs
The Australian share market ended Wednesday modestly higher after profit consolidation late in the day, mainly among the banks, pulled prices off earlier Tokyo-led highs.
The All Ordinaries index finished up 4.8 points, or 0.17 percent, to 2,774.1 on turnover of A$1.06 billion (US$657 million).
Dealers said investors had become more cautious after last week's strong gains, which took the market 5.1 percent higher.
"There's been some outstanding performances in the market over the past few days," said director Geoff Burrell of Burrell & Co., pointing at the banking sector in particular.
Banking stocks were generally stronger as concerns over possible interest rate hikes had diminished with the improving Australian dollar, which traded above US$0.62 on Wednesday.
Resources stocks had trouble keeping up with the overall market most of the day due to sluggish commodity prices, but most improved in the afternoon.
Gold miners were mostly higher as the bullion price was again pushed above US$295 an ounce.
Europe Sees Record Highs
Fireworks, then cool drizzle in Paris, Frankfurt; light volume may cap gains
July 8, 1998: 7:04 a.m. ET
Major European bourses were trading at or near record highs early Wednesday, supported by overnight gains in Asian markets. But light trading volumes were expected to put a near-term cap on the advance.
The dollar gained nearly one yen, trading above the 139 level, as the market expressed its initial disappointment at the tax reform plans announced Wednesday by Japanese Prime Minister Ryutaro Hashimoto.
"Investors are looking for a specific amount as well as a specific time. Without the numbers, you don't know how this will change the economy," said Robert Feldman, chief economist for Japan at Morgan Stanley.
New records were set in Frankfurt and Paris while other European bourses traded within a whisker of their all-time best levels.
Crude oil opened higher, with the benchmark August Brent futures contract, which lost 20 cents on Tuesday, up 13 cents a barrel to $12.88.
Precious metals also started firmer, with gold trading at $295.75 an ounce compared with $293.75 at the previous close.
London expected to remain cautious
In late morning trade in London, Europe's biggest bourse, the FTSE 100, was up 14.8 points, or 0.25 percent, to 6018.2.
London investors were expected to remain cautious as they awaited news from the Bank of England's monetary policy committee, which begins its regular deliberations on Wednesday. A majority of economists do not expect the committee to sanction an increase in British interest rates after its two-day gathering.
Frankfurt has lift-off
In Frankfurt, the Xetra DAX index punched through the 6,000 point level for the first time, setting a record trading high of 6,005.29, surpassing the previous best of 5,998.92 set Tuesday.
The floor-trading DAX, where the largest chunk of German trading is handled, also set a new record in morning trade, but it stalled short of 6,000 points at 5,997.05.
By late morning, the DAX was up 14.57 points, or 0.24 percent, to 5975.55.
Though the market drew support from strong performances in Asia overnight, traders said the new record was the result of short covering and was not caused by fundamental factors.
"There is no new money in the market," one trader said. "Volumes are thin and the market is very volatile."
Volkswagen rose 2.10 to 194.5 following news that automaker had agreed to set up a fund to compensate workere who were forced into slave labor during World War II.
Paris opens with a boom then fizzles
The Paris bourse set a record trading high of 4,346.93 early in the morning, but then paused, mirroring the small overnight drop on Wall Street.
By late morning, the blue-chip CAC-40 index was down 8.77 points, or 0.2 percent, at 4,324.32.
Technical analyst Nicolas Charvet at brokerage Ferri said the market appeared headed for a spell of stabilization after a string of advances.
"It's not technically oriented downward, neither in the short- or medium-term. But the chances of an accelerated rise are very limited," he said. He sees resistance at around 4,355 points.
END - END - END (Apologize for short report today - other time commitments necessay) |
