MARKET WRAP -1 / Canadian Market Activity Ending 12/10/98 & 12/11/98
On Friday, I prepared this column and thought I lost it through an error in processing. Rather than throw away the 3-hour effort - I thought it still might may be interesting to publish. I don't believe there is any one location or website that offers the extent of market news that appears here at the Korner.
While I am at it, permit me to take time to announce that the Kerm could use some assistance in maintaining the Korner. If you can contribute 15-20 minutes a day, two times a day, I would appreciate your assistance. Required work tasks are simple.
Onward with Market Wrap
THURSDAY 12/10/98 CLOSING
Profit Warnings And Low Oil Prices Take TSE Lower
Toronto stocks closed down on Thursday following New York's lead with investors cautious in the last few weeks of the year. The Dow Jones Industrial Average was down more than 167 points, or 1.86 percent, at 8841.58.
"We took New York's lead, there's some profit warnings creeping into investors psyche right now," said Jeff Milligan, trader with Priority Brokerage. "People are being very cautious, waiting for the market to pop up before they jump in."
"There have been a bunch of companies saying that fourth-quarter earnings are too high and I think that's infecting the market sentiment," said John McColl, portfolio strategist at ScotiaMcLeod Inc.
The latest earnings cautions came from Swedish telecommunications firm Ericsson, drug company Merck & Co. and investment bank J.P. Morgan.
"The United States has a higher ledge to fall off," McColl said. "We seem to be sort of drifting into the year-end and I am not sure, personally, that we should read a tremendous amount into the direction of the market."
The Toronto Stock Exchange TSE 300 Composite Index lost 90.52 points, or 1.41 percent, to 6315.78 in trade of 113.1 million shares worth C$1.66 billion. Decliners outpaced advancers 612 to 393 with 299 issues holding their ground.
The Dow Jones Industrial Average was down more than 167 points, or 1.86 percent, at 8841.58.
The TSE 300 index remains more than 1,500 points below its record high -- 7,822.25 -- set on April 22. The index opened 1998 at 6,699.44 and many analysts doubt it will regain that level before year-end.
All but one of the 14 sub-groups closed down on the day.
The one winner was gold and precious minerals. Shares of Canadian gold producers rose in step with a downward draft in North American equity markets and growing fears that a two-month stock bubble might be about to burst. The Toronto Stock Exchange's gold and precious minerals stocks gained an average 4.1 percent, which helped to cushion an overall drop in stock prices.
Gold, a traditional hedge against uncertainty in financial markets, had been trading in a tight range between $292 and $296 an ounce for the past month as investors rushed to hold equities. It traded at $294 an ounce on Thursday.
"It (gold) has been stuck in a range because the stock market bubble continues. My sense is that whenever that ends you'll start seeing some of that money overflowing into gold," said John Ing, president of Maison Placements Canada Inc. "We're seeing a little bit of that action today," Ing added.
Senior gold producers Placer Dome Inc. and Barrick Gold Corp. were the major beneficiaries of renewed confidence in gold. Vancouver-based Placer soared C$1.50, on trading of 1.4 million shares, to close at C$22.85 a share - or 7 percent, while Toronto-based Barrick climbed C$1.60 to C$30.20 a share - or 5.6 percent on volume of 1.9 million shares.
Canada's gold stock index, which accounts for about five percent of the TSE 300, has gained about 44 percent since August 31, but it remains about 4 percent lower than its 1997 close.
Declining sectors were led by oil and gas. The oil and gas sector posted the heaviest losses as crude oil futures plunged to new 12-year lows. West Texas intermediate crude oil fell below $11 US a barrel as continuing warm weather cooled demand. The oil & gas composite index fell 3.0% or 143.06 to 4667.77. Among sub components, the integrated oils dropped 2.2% or 165.63 to 7291.12. The oil & gas producers lost 3.4% or 141.15 to 4054.69 and the oil & gas service group fell 2.7% or 37.21 to 1342.07.
The most active issue on the TSE was Kookaburra Resources +$0.21 to $1.21 followed next by Bitech Petroleum, unchanged at $1.40. Also included among the top 50 most actives were Gulf Canada Resources -$0.03 to $4.42, Canadian Hunter -$0.45 to $9.50, Petro-Canada -$0.35 to $16.75, Elk Point Resources +$3.47, Talisman Energy -$1.65 to $27.05, Trican Well Services u/c @ $2.80 and Suncor Energy -$0.70 to $47.40.
Top gainers included Shell Canada A +$0.65 to $24.35, Westminster Resources +$0.45 to $5.85 and Badger Daylighting +$0.40 to $6.90.
On the downside, Canadian Natural Resources -$1.80 to $21.65, Talisman Energy -$1.65 to $27.05, Imperial Oil -$1.55 to $25.25, Alberta Energy -$1.40 to $32.55, Suncor Energy -$0.70 to $47.40 and Seven Seas Petroleum (U) -$0.65 to $5.60.
Top percentage gainers included Kookaburra Resources, Thunder Energy, Westminster Resources, Pe Ben Oilfield, Morrison-Middlefield, Elk Point Resources, Badger Daylighting and Vermilion Resources.
Percentage losers included Seven Seas Petroleum, Encal Energy, Zargon Oil & Gas, Fracmaster, Canadian Natural Resources, Enertec Resource services, Hurricane Hydrocarbons, Imperial Oil and Talisman Energy.
Following oil and gas to the downside, utilities fell 2.4%, consumer products -2.3% and metals and mines -2.1%.
The industrial sector also closed down 2.1%.. Two of Canada's largest auto parts makers, Magna International and Ventra Group Inc. , reported quarterly profits that were in line with trade expectations.
Paper and forest products fell 1.8%, merchandising -1.4%, financial services -1.1%, communications and media -0.7%, pipelines -0.6%, transportation and environment -0.5% and real estate -0.2% were among the remaining down sectors.
Among the biggest TSE losers, BCE Inc. dropped $2.00 to $54.90, Nortel Networks fell $2.65 to $72.85 and Magna International A gave up $1.80 to $102.60. Sun Media Corp. climbed 15 cents to $21.05 on 1.7 million shares traded, Seagram lost $3.25 to $53.00 on just over a million shares.
The Montreal Stock Exchange index fell 61.15 to 3270.75 on very heavy volume of 21.0 million shares with a value of $257.7 million.
Among the top 20 gainers, Shell Canada A gained $0.70 to $24.35. Oil and gas issues were not listed among the top 20 losers.
Pebercan gained 16.7% to $1.05 and Fracmaster fell 8.8% to $3.65.
The Alberta Stock Exchange combined value index fell 15.27 to 1700.95 on volume of 10.6 million shares worth a value of $3.3 million. 466 issues were traded with 134 issues gaining, 179 to the downside with another 153 issues unchanged.
Among the top 20 most active issues were Colt Energy, unchanged @ $0.39, Belfast Petroleum unchanged @ $1.55, Talon Petroleum -$0.05 to $0.40, Key West Energy +$0.02 to $0.70, Corridor Resources unchanged @ $0.50 and Grey Wolf Exploration -$0.02 to $0.31.
Top gainers included Niko Resources +$0.25 to $5.25, Desmarius Energy +$0.15 to $0.25 and Edge Energy +$0.10 to $2.60.
On the downside, Arrival Energy A -$0.30 to $1.10, Maxwell Oil & Gas -$0.20 to $0.65, Telford Resources -$0.20 to $0.65, Surefire Energy A -$0.17 to $0.90, Draig Energy -$0.15 to $1.05, Gopher Oil & Gas -$0.11 to $0.78 and Mera Petroleum -$0.11 to $0.97.
On the Vancouver Stock Exchange, the VSE composite indicator gained 2.03 to 389.55. The VSE mining indicator rose 2.76 to 293.26. Trading was very active. Volume was 25.7 million shares with a value of $24.7 million. 152 issues advanced, 148 declined with another 394 issues unchanged.
Stanford Oil & Gas +$0.47 to $1.58, Hilton Petroleum +$0.60 to $2.85 and Ultra Petroleum unchanged @ $1.48 were among the top 15 most active issues.
Top gainers included Hilton Petroleum +$0.60 to $2.85 and Stanford Oil & Gas +$0.47 to $1.58.
On the downside was Meridian Energy -$0.10 to $0.70.
Canadian Dollar Closes Softer As Oil Price Slips
The Canadian dollar closed slightly softer at C$1.5398 ($0.5494) on Thursday as slumping commodity prices reversed its brief overnight and morning rally, traders said.
Canada's dollar was buoyed overnight on a slumping U.S. dollar and on the coattails of a stronger Japanese yen, but sinking oil prices brought U.S. dollar buyers back into currency markets, traders said.
The 3.03 percent decline in oil and gas and $0.34 fall in Brent crude oil to $9.63 a barrel also weighed on Canada's currency which closed down at C$1.5398. Oil is at its lowest price levels since 1976.
Traders said currency markets were more active today but still generally thin. They said there was little interest in the Canadian dollar, which has settled into a narrow range in December.
Canadian Bonds End Stronger As Stocks Weaken
Canadian government bonds ended stronger on Thursday as investors favored safe fixed-income securities over slumping and volatile North American stocks.
Bonds resumed a rally, led by good gains in U.S. treasuries. As the price was rising, Canada's long-bond yield fell closer to an intra-day record low of 5.13 percent, hit in early October when global jitters prompted safe-haven buying.
"The Dow was down 167, and the long bond has been trading in negative correlation to the equity market," said Sheldon Dong, fixed-income strategist at Merrill Lynch Canada. "Canada's were hanging on to most of their gains."
Falling prices in energy and commodities are positive for bonds as real returns on investment is secured under low inflation and deflation.
Canada's benchmark 30-year bond due June 1, 2027, rose C$0.54 to C$141.80, pushing down the yield to 5.177 percent. The U.S. 30-year rose 17/32 to yield 4.952 percent.
The Canada-U.S. spread was 23 basis points after 22 points at the previous close here.
The Dow Jones Industrial Average closed down 167.61 at 8841.58, and the Toronto's 300 Composite Index ended off 90.60 at 6315.70 on Thursday, after a short-lived recovery earlier this week.
"Stocks and bonds are going in the opposite direction still. So if you want to hedge your bond exposure, it's good to go to stocks, and vise versa," said Harvinder Kalirai, economist at I.D.E.A. in New York.
The market is awaiting economic indicators as the holiday season approaches.
U.S. retail sales and producer price index (PPI) data for November, due out on Friday, are expected to show a slower pace of consumer spending and contained inflation, which should be neutral to supportive for bonds.
U.S. retail sales are seen falling 0.1 percent after a 1.0-percent rise in October. The rise in ex-auto sales seen slowing to 0.3 percent from 0.5 percent, according to Reuters' survey. The PPI is forecast to fall 0.1 percent after rising 0.2 percent, and the core rate rising 0.1 percent after the same rate of increase in the previous month.
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FRIDAY 12/11/98 CLOSING
Stocks, Dollar Finish Lower Amid Investor Psychology Related To Renewed Market Fears And Profit Warnings
Renewed global gloom continued to push North American stocks and the Canadian dollar lower Friday amid depressed commodity prices and fears of lower corporate earnings. Impeachment proceedings in the United States also added pressure in markets.
"I think the market is a little on the nervous side here. Not knowing how extensive these earnings drops are going to be and whether or not they're going to continue on into the second and third quarters of next year even is hurting us more than anything," said Fred Ketchen, director of equity trading at ScotiaMcLeod.
"What's bothering this market is the fourth-quarter confessional that is taking place at many companies," said Fred Ketchen. "This kind of stuff is going to go on for a while longer, because there's nothing here to make this market turn around."
The markets have been roiled in recent days by revelations from companies warning that their earnings are expected to disappoint.
"The market recognized that interest rates are down but people are worried about these earnings warnings," said Dave Picton, portfolio manager at Synergy Mutual Funds.
Both the stocks and the dollar are again feeling the effects of nervousness generated by skepticism about whether economic stability has returned to world markets.
"There's a lot more gloom coming back into the market over the outlook for the global economy," said Rob Palombi, an economist with Standard & Poor's MMS in Toronto.
"That has put pressure on commodity prices -- oil sinking to 12-year lows and broader indices sinking to 21-year lows -- and all of that is weighing on the Canadian dollar."
Nothing hurt more than the price of gold, which plunged $3.30 US to finish the day at $290.80 US on the New York Mercantile Exchange. The TSE's gold and silver index plunged nearly three per cent on the day.
And while sinking oil, paper, and metals prices typically hurt the loonie because of Canada's reputation as a commodity-based economy, the currency markets aren't the only ones being hurt, Palombi said. Corporate earnings estimates are falling all across North America, the most recent coming today when soft drink juggernaut Coca-Cola Co. said it expects to earn 24 to 25 cents US a share in the October-December period, well below analysts' estimates of about 30 cents a share. Chairman and chief executive Douglas Ivester cited "a pattern of volatility in many markets that has resulted from continued economic and political uncertainty" for the lower expectations.
The Atlanta-based company joins legions of major U.S. and Canadian corporations which have cut their earnings expectations in recent weeks, including Swedish telecommunications company Ericsson, the world's largest maker of wireless phones, J. P. Morgan, Procter & Gamble and Merck and Co.
"What's bothering this market is the fourth-quarter confessional that is taking place at many companies," said Fred Ketchen, a senior vice-president at Scotia Capital Markets in Toronto.
"This kind of stuff is going to go on for a while longer, because there's nothing here to make this market turn around," he said.
Also adding to the nervousness are the woes of U.S. President Bill Clinton, who faces impeachment proceedings in the wake of his controversial dalliances with White House intern Monica Lewinsky.
Moments after markets in eastern North America closed, U.S. President Bill Clinton said he was prepared to accept censure by the U.S. Congress for having misled investigators about his affair with Monica Lewinsky. But the U.S. House judiciary committee voted to recommend impeachment.
"There's an unsettling feeling about what's taking place in Washington," Ketchen said. "It looks like this is turning out to be more serious than many people thought it was going to be."
The weakness in the stock market comes almost as suddenly as the nearly two-month rally that began in September when the U.S. Federal Reserve Board began lowering interest rates.
Three quarter-point rate cuts, all matched by the Bank of Canada, fuelled newfound liquidity in North American markets that erased the TSE 300's losses for the year and pushed the Dow to an all-time high.
Those gains are fading fast, however.
"It's pessimistic today, maybe it's the last bout of tax-loss selling. The energy sector and commodities were holding us back," said Rick Hutcheon, president of CentrePost Mutual Funds.
In New York, the Dow Jones industrial average -- reeling from a 167-point drop Thursday -- managed a late-day rally to finish down 19.82 points, or 0.22 percent, to 8821.76. The Dow is more than 530 points below its record of 9,374.27 set Nov. 23.
The TSE 300 composite index finished the day 56.89 points, or 0.9% lower at 6,258.76. Volume on the TSE was heavy at 134.5 million shares worth C$1.9 billion. Decliners outpaced advancers 579 to 405 with another 322 issues unchanged.
The TSE 300 was down 79.51 points, or 1.25 percent, compared to last Friday.
The TSE 300 index remains more than 1,500 points below its record high -- 7,822.25 -- set on April 22. The index opened 1998 at 6,699.44 and many analysts doubt it will regain that level before year-end.
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Chart - TSE 300
canoe.quote.com
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Overall in Toronto, 13 of the TSE 300's 14 subindexes closed down led by the gold and precious metals group 2.95%, metals and minerals 1.89%, consumer products 1.76%, utilities 1.46%, conglomerates 1.34%, industrial products 1.28%, oil and gas 1.23%, paper and forest products 1.10%, communication and media 0.98%, transportation and environental 0.84%, pipelines 0.81%, real estate 0.34%, financial sdrvices 0.31% and merchandising 0.03%.
Reserve Royalty was the exchange's most active issue. Shares were unchanged at $0.68 on volume of 9 million shares.
Among the top 50 most active issues were Bitech Petroleum +$0.10 to $1.50, First Calgary Petroleum -$0.05 to $0.20, Canadian Hunter Exploration w/i -$0.25 to $9.25, Kookaburra Resources -$0.04 to $1.17, Gulf Canada Resources -$0.01 to $4.41, International Datashare -$0.08 to $0.18, Startech Energy +$0.20 to $4.10, Petro-Canada -$0.15 to $16.60, Canadian Occidental -$0.10 to $18.30 and Abacan Resources -$0.02 to $0.36.
There wasn't any data for top net gainers & losers.
Percentage winners included ML Cass Petroleum, Petro Energy, TransDominion Energy, Calibre Energy, Pendaires Petroleum, International Rochester, Snow Leopard, Scorpian Energy and Latteral Vector Resources.
Percentage losers included International Datashare, Palliser Energy, First Calgary Petroleum, Crew Developement, Big Bear Exploration, Blue Range Resources, Best Pacific Resources, Black Sea Energy, Northstar Drilling and CE Franklin.
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Oil & Gas Charts - TSE 300
Oil & Gas Composite
chart.canada-stockwatch.com
Integrated Oil's
chart.canada-stockwatch.com
Oil & Gas Producers
chart.canada-stockwatch.com
Oil & Gas Srvices
chart.canada-stockwatch.com
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Gold, a traditional hedge against inflation and uncertainty in financial markets, had been trading in a tight range between $292 and $296 an ounce for the past month as investors rushed to hold equities. It fell more than $4 to $289.70 an ounce on Friday.
Analysts said doubts that gold can rally significantly beyond the $300 an ounce area were continuing to weigh on gold stocks. "Some people have suggested that if it ever gets to $300 (an ounce) and shoots through $315 it will establish a new level from which to work," said Fred Ketchen, director of equity trading at ScotiaMcLeod.
"It can't do it. I just don't know what there is to attract anybody at the present time to gold," Ketchen said.
Senior gold producers Placer Dome Inc. (PDG.T) and Barrick Gold Corp. (ABX.T) were among those sideswiped by the shaky sentiment for gold. Placer Dome fell C$1.05 to C$21.80 and Barrick Gold slipped C$0.90 to C$29.30 with more than 1.45 million shares trading.
Canada's gold stock index, which accounts for about five percent of the TSE 300, has gained about 41 percent since August 31, but it remains about 7 percent lower than its 1997 close.
The heavy weight financial services sector ended down. Toronto Dominion Bank closed down C$0.05 to C$50.20 and the Canadian Imperial Bank of Commerce ended down C$0.20 to C$34.15.
Consumer products bucked the trend and closed up 1.76 percent.
The Montreal Stock market portfolio fell 10.67 to 3260.08 on heavy volume of 15.7 million shares valued at $226.3 Million.
There weren't any oil and gas issues found in the top 20 most active issues.
Percentage winners included Icon Energy and SRI Oil & Gas, while percentage losers included Pacific Tiger Energy and Sharpe Resources.
The Alberta Stock Exchange's combined value index rose 4.76 to 1705.71 on volume of 13.0 million shares valued at $3.76 million. 428 issues were traded with 131 advancing, 138 declining with another 159 unchanged.
Oil and gas issues among the top 20 most active included Del Mar Energy +$0.02 to $0.09, Alta Pacific Capital -$0.02 to $0.19, Desmairus Energy +$0.27, ICE Drilling -$0.03 to $0.17, Pyramid Energy -$0.03 to $0.13, Reliance Energy +$0.01 to $0.26 and Stampede Oils +$0.05 to $0.16.
Percentage winners included High Point Energy, Stampede Oils, Aegis Energy, Alpetro Resources and Sawtooth International.
Persentage losers included Resolution Energy, New North Resources and Redeco Energy.
The Vancouver Stock Exchange's composite indicator finished down 0.97 to 388.58. The mining indicator closed down 1.81 to 291.45. Volume of 26.0 million shares was classified as avtive. trading value was $20.3 million. 146 issues closed higher, 179 were to the downside with another 348 issues unchanged.
Oil and gas issues among the top 20 most actives included Stanford Oil & Gas -$0.15 to $1.43, Ultra Petroleum -$0.16 to $1.32, Adda Resources +$0.07 to $0.34 and Sharon Energy -$0.01 to $0.06.
Delpet Energy was among the top percentage gainers and Curlew Lake was among the losers.
References
Canadian Market Digest
quote.yahoo.com
Canadian Markets/Sectors
quote.yahoo.com
Canadian Most Actives
quote.yahoo.com
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