MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING TUESDAY, MAY 19 1998 (1)
Canada
Toronto stocks closed a choppy, directionless session lower Tuesday with the base and precious metals groups as the market's leading losers.
Volumes were thin as Canadian traders returned to work following the Victoria Day holiday weekend and should remain so as U.S. dealers gear up for the Memorial Day weekend.
In the U.S., the Federal Reserve Board opted not to raise rates, but analysts weren't convinced Tuesday that the Fed will be able to hold off much longer.
"While the doves carried sway once again, investors would be prudent to assign at least a reasonable probability to a tightening in Fed policy in the months ahead," said a market report from Nesbitt Burns Inc.
"Financial markets are hardly braced for a near-term rate increase."
''What we are seeing is not a lot of volume out there,'' said Irwin Michael, portfolio manager at ABC Funds.
''There's a little bit of a buyers' boycott...So if you want to sell something, you will probably knock it down because we are seeing a lot of volatility in prices today. On the other hand, if you want to buy something, it's pretty thin on the offering so you can really move a stock up.''
Michael said he expects little to change that volatility in the days to come.
The closely watched TSE 300 Composite Index gave up 21.64 points, or 0.3% to 7662.38 to end at 7662.38. Volume was a relatively scant 77.2 million shares, down from 82.8 million shares traded on Friday. Canadian markets were closed Monday for the Victoria Day holiday. Trading volume was worth C$1.3 billion. Falling issues outdistanced rising ones 618 to 420, with 307 holding their ground.
The spot price of gold slid $0.90 to $298.70 US and took gold stocks with it. Gold and precious mineral miners swept almost 12 points from the TSE 300 index. The gold and silver subindex dropped 207.61, or 2.87 percent, to 7034.16 while the base metals group fell 80.42, or 2.03 percent, to 3872.79. Expectations of low inflation undermined the demand for bullion as a hedge against rising prices. Barrick Gold Corp. lost $1.05 to close at $30.75. Franco-Nevada Mining slipped $0.25 to $34.00, while Placer Dome Inc. lost 75 cents to end the day at $19.85.
The losses carried over to the mining and minerals sub-index, which lost 2.03 per cent on the day. Alcan Aluminium fell 85 cents to $44.75, Inco Ltd. lost 80 cents to $21.80 and Rio Algom Ltd. dropped 65 cents to land at $23.05.
Consumer products was the third-worst sub-index, falling 1.04 per cent.
Merchandising stocks were the strongest grouping of the day, gaining 0.92 per cent on the strength of George Weston Ltd. climbing $3.75 to $147.75. Canadian Tire Corp.'s A shares also gained 95 cents to $38.80. Sears Canada gained $0.05 to $27.75; Loblaw Inc. was off $0.25 to $31.80.
Financial services stocks fared well in the wake of word that the Fed would hold its fire on an interest rate hike, gaining 0.78 per cent. Royal Bank climbed $1.35 to $86.85, while merger partner Bank of Montreal was up $0.95 to $78.20. Canadian Imperial Bank of Commerce gained $0.40 to $50.25. TD Bank was up a dime to $63.80.
The real estate and construction sub-group was up 0.57 per cent as the day's third-best index.
Several blue chip shares were active during the session. NOVA Corp. stock topped the roster, finishing unchanged on the day at C$16.65 in turnover of 2.16 million shares.
Rogers Communications Inc. class B shares finished C$0.60 higher at C$9.50. Analysts said the cross of a large block skewed the share price.
Stock in transportation and aerospace powerhouse Bombardier Inc. was off C$0.50 at C$38 at the close. The U.S. National Transportation Safety Board Tuesday issued a number of recommendations on making watercraft like the company's Sea-Doo safer to ride.
Shares in Seagram Co. Ltd. (vo/tse) took a beating. Shares in the entertainment and beverage giant, which is in talks to acquire Philips Electronics' 75 percent stake in PolyGram, sank C$2.25 to C$60. Dominion Bond Rating Service said it was placing Seagram debt under review with developing implications. ''Seagram's risk profile is weakening as the size of its entertainment division increases relative to the less risky and more stable spirits division,'' the debt-rating agency said. The beverages and entertainment company may sell its 11 million shares in Time Warner Inc. to raise money for its planned acquisition of PolyGram NV, the Dutch music and film company, sources said.
Petro-Canada (pca/tse) slid 45› to $24.10 and Canadian Occidental Petroleum Ltd. (cxy/tse) fell 65› to $31.70. West Texas crude oil fell US$1.11 to US$12.96 a barrel -- the lowest close since Oct. 5, 1988 -- on the Nymex.
Telecommunications company BCE Inc. (bce/tse) fell 55› to $64.30 as some investors expressed concern that the company's share price may have outpaced its profit outlook.
"Valuations for telecommunications companies are quite high," said Subodh Kumar, chief portfolio strategist with CIBC Wood Gundy Securities Inc. " BCE is also quite liquid and I believe investors are selling and building cash while the market is volatile."
Other Canadian markets closed lower. The Montreal Exchange portfolio fell 8.27 points, or 0.2%, to 3860.86. The Vancouver Stock Exchange fell 6.18 points, or 1%, to 614.57.
United States
U.S. stocks rose only modestly after the U.S. Federal Reserve left interest rates unchanged, making it likely that borrowing costs will stay low and profits will expand. Citicorp and other banks paced the advance.
The Dow Jones industrial average climbed 3.74 points to 9054.65. DuPont Co. (dd/nyse) was the Dow's biggest gainer, rising US$1 7/16 to US$82 3/16, after it said it would buy Merck & Co.'s drug venture interest for US$2.6 billion. Merck shares (mrk/nyse) fell 15/16 to US$118 7/8.
The Standard & Poor's 500 composite index gained 3.7 points, or 0.3%, to 1109.52.
About 569.9 million shares changed hands on the Big Board, up from 523.1 million shares traded on Monday.
The Nasdaq composite index rose 14.25 points, or 0.8%, to 1845.87.
Chase Manhattan Corp. (cmb/nyse) rose US$2 3/4 to US$144 13/16 after chairman Walter Shipley said he expects "double-digit" per-share earnings growth and that the company does not feel pressure to merge. Citicorp (cci/nyse) rose US$2 to US$155 1/2 and BankBoston Corp. (bkb/nyse) climbed US$3 7/16 to US$110 7/16.
Cor Therapeutics Inc. (corr/nasdaq) edged up 9/16 to US$17 7/16 after the company won full U.S. Food and Drug Administration approval for its Integrilin heart drug.
Bristol-Myers Squibb Co. (bmy/nyse) jumped US$2 1/16 to US$111 3/16 after a study showed that the company's drug, Taxol, when added to post-surgery chemotherapy in the early stages of breast cancer, boosts the odds of survival. Pfizer Inc. (pfe/nyse), the maker of the impotence drug Viagra, gained US$2 3/16 to US$112 7/8. Some 278,715 prescriptions for Viagra were filled in the week ended May 8, up 6% from a week earlier.
Dell Computer Corp. rose amid optimism over its first-quarter results. Dell shares (dell/nasdaq) have quadrupled in the past year. The stock rose 3/32 to US$94 19/32 before the earnings were released. After the market closed, Dell said its earnings for the three months ended May 3 rose 54% to US$305 million, or US44› a diluted share, from $198 million, or a split-adjusted US27› diluted, in the year-earlier period. Revenue soared 51% to US$3.92 billion from US$2.59 billion a year earlier. The world's No. 3 personal computer maker was expected to earn US42› a diluted share for the quarter.
International Stocks
Suharto Promise Boosts Optimism
A promise of new elections from Indonesian President Suharto pushed world markets into mild rallies yesterday, but analysts said the underlying sentiment in much of Asia remained weak.
Jakarta: The Jakarta Stock Exchange composite index gained 6.4% to close at 413.8 points on hopes that the 76-year-old autocrat would step down gracefully after a transitional period. But trade was extremely thin, with trading value of just 79 billion rupiah, compared with the daily average of 300 to 400 billion rupiah.
London: The prospect of reform in Indonesia stemmed the slide in Britain of banks like HSBC Holdings PLC and Standard Chartered PLC, which had fallen on concern about their US$3 billion-plus investments in the country. Indonesian companies owe about US$80 billion in foreign debt. "The banks had to admit their exposure to Indonesia recently," said Simon Smith, a fund manager at Albert E. Sharp in Birmingham, England. "If Indonesia can stabilize it will help. There is less danger of the troubles escalating to other parts of Asia." The British market also shook off the effects of stronger than expected inflation data to close broadly higher. The FT-SE 100 index rose 51.6 points, or 0.9%, to 5877.8. Lloyds TSB Group PLC rose 27p to 860.5, while HSBC added 15p to 1,663 and Standard Chartered rose 5.5p to 781.5.
Frankfurt: German shares settled higher in subdued trading, ahead of the outcome of the U.S. Federal Reserve's open market committee meeting. The Dax index rose 46.05 points, or 0.9%, to 5388.9. In later screen-based trade, the Xetra Dax climbed 97.34 points, or 1.8%, to 5441.
Tokyo: In Japan, where Indonesian trouble spells more bad loans for Japanese banks, the 225-share Nikkei average strengthened 167.18 points, or 1.1%, to 15,551.65. Investors also sought shares of companies that announced share buybacks and those with strong earnings prospects. Nippon Steel shares rose eight yen to 223 yen.
Hong Kong: Shares gyrated but eventually closed higher by 37.14 points, or 0.4%, at 9449.11. On the Hong Kong market HSBC gained HK$2 to HK$199.50.
Sydney: Australian shares ended moderately higher, with Australia & New Zealand Banking Group Ltd. jumping A40› to close at A$11. The all ordinaries index climbed 8.7 points, or 0.3%, to 2742.
|
