Roger Biduk writes:
The Toronto stock market ended a horrible 2008 trading year down a stunning 35 per cent - but ended the last session of the year with a strong, triple-digit advance led across all sectors, led by gains in financials and energy, the two biggest sectoral decliners of the year.
Toronto's S&P/TSX composite index closed up 156.98 points in thin volume to 8,987.7, its third consecutive triple-digit drive that added to a gain of points or per cent.
Those broad advances helped reduce losses from a miserable year that saw the TSX above 15,000 at midyear before the financial crisis sent the main index down as low as 7,724 near the end of last month. It comes close to the worst calendar year on the Toronto market in records dating to 1920 - vying with 1931 when the market plunged 37.15 per cent.
The TSX Venture Exchange was ahead 23.96 points to 797.02 after starting the year at 2,839.66.
The CDN$ closed up a fifth of a US cent to 82.1 cents, capping a year when the loonie retreated 18.7 per cent for the year as the slowing economy and collapsing commodity prices dragged it down from just above parity with the U.S. dollar at the start of 2008.
The TSX financial sector, down about 38 per cent as banks wrote off billions of dollars related to the U.S. housing sector, was ahead two per cent on the year's final day. TD Bank (TSX:TD), down 40 per cent this year, rose 95 cents to $43.45 as the bank dealt with a computer glitch that caused outages of its customer banking and investor services across the country. The problem was fixed by later afternoon.
CIBC (TSX:CM), which had the dubious distinction of racking up the greatest amount of writedowns during 2008, climbed $1.34 to $51.09. The stock is down 35 per cent from where it started the year - but the stock hit a low of $39.52 Nov. 21.
The Toronto energy sector was up 1.7 per cent.
The February crude contract in New York surged $5.57 or 14 per cent to US$44.60 a barrel, a far cry from July's record high of US$147 a barrel, taking the TSX energy sector down 38 per cent for the year. Prices had earlier slipped as worries about global demand trumped rising tensions in the Middle East resulting from continuing Israeli air strikes in Gaza.
Prices rose in thin trading after the government reported that U.S. refineries ran at 82.5 per cent of total capacity on average for the week ended Friday, a drop of 2.2 per cent from the prior week and below analysts' expectations that it would remain flat.
Shares in sector heavyweight EnCana Corp. were up 55 cents to $56.96, down from a 52-week high of $97.81. Oilexco Inc. (TSX:OIL) plunged 68 per cent to 28.5 cents after it said its British North Sea subsidiary is insolvent.
Roger biduk writes:
The other major loser is the base metals sector, down a staggering 68 per cent. Sector leader Teck Cominco Ltd. (TSX:TCK.B) closed up two cents to $6.02 after starting the year at $52.90.
The February bullion contract moved up $14.30 to US$884.30, about US$46 higher than where bullion started the year. The gold sector itself is flat for the year. It was up per cent Wednesday with Goldcorp Inc. (TSX:G) ahead $1.10 to $38.39.
The telecom sector was ahead 1.75 per cent Wednesday with BCE Inc. (TSX:BCE) up 99 cents to $25.13, down 38 per cent from its 52-week high attained when it looked like the $52 billion purchase of the telecom by a group led by the Ontario Teachers Pension Plan was still a go.
Shares in Research in Motion Ltd. (TSX:RIM) were up $2.10 to $49.50 after it extended its offer to buy Toronto-based Certicom Corp. (TSX:CIC) by 12 days. The BlackBerry maker's stock has plunged 67 per cent since its most recent 52-week high, which in turn helped take the information technology sector down about 50 per cent for the year.
Damage on the TSX was widespread covering all sectors except gold. There was surprise that victims included sectors that are normally considered good defensive plays.
But the consumer staples sector fell 8.3 per cent while the utilities sector gave back 24 per cent.
In other corporate news, shares in Labopharm Inc. (TSX:DDS) soared 63 cents or 38.65 per cent to $2.26 after the U.S. Food and Drug Administration approved Ryzolt, the Montreal-area company's once-daily formulation of painkiller Tramadol.
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Thursday, January 1, 2009
Monday, December 22, 2008
Bay Street Lower on Oil & Metals
Roger Biduk writes:
Another wave of bad economic sentiment wore through the Toronto stock market Monday as oil prices fell and Japanese auto giant Toyota Motor Corp. projected its first-ever full-year operating loss.
Toronto's S&P/TSX composite index fell 302.47 points to 8,249.53, and the Canadian dollar moved higher at 82.03 cents US, up 0.26 of a cent.
The TSX Venture Exchange was down 7.02 points to 692.02.
The energy sector lost six per cent as the light, sweet crude contract fell $2.45 to US$39.91 a barrel on the New York Mercantile Exchange.
Observers suggest slowing oil demand in China and Japan will cause the Organization of Petroleum Exporting Countries to further cut production. Last week, OPEC cut production to 2.2 million barrels a day.
Toyota provided more evidence of companies' struggles amid a sharp drop around the world in demand for products of all kinds.
The Japanese automaker slashed its earnings forecast for a second time, warning that it now expects to report its first-ever operating loss for the fiscal year through March. While Toyota doesn't directly trade on the Canadian stock market, the company's weakness is worrying Canadian investors already concerned about the fate of the so-called Detroit Three carmakers - GM, Ford and Chrysler - and the long-term health of the global auto sector.
Auto jobs are key to the success of Canada's manufacturing economy centred in Ontario and Quebec.
Toyota's latest comment also adds further pressure to Canadian companies like autoparts maker Magna International (TSX:MG.A) which supplies manufacturers around the globe. Magna stock was nearly four per cent lower, down $2.73 to $33.51.
Roger Biduk writes:
On the TSX, diversified metals stocks were the main decliner, dropping 7.7 per cent, as Teck Cominco Ltd. (TSX:TCK.B) fell 66 cents to $5.15.
The gold sector was down 4.4 per cent as the February bullion contract rose $9.80 to $847.20.
Also facing Canadian investors were the lowest consumer confidence levels in more than a quarter century. The Conference Board of Canada says confidence fell for its third consecutive month and dropped the index 3.3 points to 67.7, lower than during the 1991 recession and the lowest since 1982.
Information technology stocks were 2.8 per cent lower as Research in Motion (TSX:RIM) dukes it out with Certicom Corp. (TSX:CIC) over a takeover bid which Certicom is trying to block. RIM shares lost $3.29 to C$50.03, while Certicom rose eight cents to $1.80 - well above RIM's offer price of $1.50 per share.
AbitibiBowater Inc. (TSX:ABH) shares gained 13 cents, or 24.5 per cent, to 66 cents after the company said it would receive $197.5 million, less expenses, for sale of its interest in hydro-electric generating assets in Ontario. The unidentified buyer would assume $250 million in term debt held by ACH Limited Partnership, which is owned 75 per cent by AbitibiBowater.
Fronteer Development Group (TSX:FRG) says it intends to buy the common shares of Aurora Energy Resources Inc. (TSX:AXU) that it doesn't already own, giving Aurora shareholders 0.83 of a Fronteer share for each Aurora common share they own. Fronteer shares dropped 94 cents to $2.19 while Aurora shares gained 59 cents to $1.56.
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Another wave of bad economic sentiment wore through the Toronto stock market Monday as oil prices fell and Japanese auto giant Toyota Motor Corp. projected its first-ever full-year operating loss.
Toronto's S&P/TSX composite index fell 302.47 points to 8,249.53, and the Canadian dollar moved higher at 82.03 cents US, up 0.26 of a cent.
The TSX Venture Exchange was down 7.02 points to 692.02.
The energy sector lost six per cent as the light, sweet crude contract fell $2.45 to US$39.91 a barrel on the New York Mercantile Exchange.
Observers suggest slowing oil demand in China and Japan will cause the Organization of Petroleum Exporting Countries to further cut production. Last week, OPEC cut production to 2.2 million barrels a day.
Toyota provided more evidence of companies' struggles amid a sharp drop around the world in demand for products of all kinds.
The Japanese automaker slashed its earnings forecast for a second time, warning that it now expects to report its first-ever operating loss for the fiscal year through March. While Toyota doesn't directly trade on the Canadian stock market, the company's weakness is worrying Canadian investors already concerned about the fate of the so-called Detroit Three carmakers - GM, Ford and Chrysler - and the long-term health of the global auto sector.
Auto jobs are key to the success of Canada's manufacturing economy centred in Ontario and Quebec.
Toyota's latest comment also adds further pressure to Canadian companies like autoparts maker Magna International (TSX:MG.A) which supplies manufacturers around the globe. Magna stock was nearly four per cent lower, down $2.73 to $33.51.
Roger Biduk writes:
On the TSX, diversified metals stocks were the main decliner, dropping 7.7 per cent, as Teck Cominco Ltd. (TSX:TCK.B) fell 66 cents to $5.15.
The gold sector was down 4.4 per cent as the February bullion contract rose $9.80 to $847.20.
Also facing Canadian investors were the lowest consumer confidence levels in more than a quarter century. The Conference Board of Canada says confidence fell for its third consecutive month and dropped the index 3.3 points to 67.7, lower than during the 1991 recession and the lowest since 1982.
Information technology stocks were 2.8 per cent lower as Research in Motion (TSX:RIM) dukes it out with Certicom Corp. (TSX:CIC) over a takeover bid which Certicom is trying to block. RIM shares lost $3.29 to C$50.03, while Certicom rose eight cents to $1.80 - well above RIM's offer price of $1.50 per share.
AbitibiBowater Inc. (TSX:ABH) shares gained 13 cents, or 24.5 per cent, to 66 cents after the company said it would receive $197.5 million, less expenses, for sale of its interest in hydro-electric generating assets in Ontario. The unidentified buyer would assume $250 million in term debt held by ACH Limited Partnership, which is owned 75 per cent by AbitibiBowater.
Fronteer Development Group (TSX:FRG) says it intends to buy the common shares of Aurora Energy Resources Inc. (TSX:AXU) that it doesn't already own, giving Aurora shareholders 0.83 of a Fronteer share for each Aurora common share they own. Fronteer shares dropped 94 cents to $2.19 while Aurora shares gained 59 cents to $1.56.
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Saturday, December 20, 2008
Financials Lift Bay Street
Roger Biduk writes:
A late-day revival in financials helped push the Toronto stock market higher Friday as a multibillion-dollar taxpayer guarantee is expected to finally end the uncertainty around the asset-backed commercial paper market.
Toronto's S&P/TSX composite index advanced 126.65 points to 8,552.00 for a gain of 37 points this week.
The TSX Venture Exchange ticked 1.41 points lower to 699.04.
The Canadian dollar fell 1.11 cents to 81.77 cents US after Statistics Canada reported the inflation rate dropped to two per cent last month, from 2.6 per cent in October, as gasoline price eased 14.4 per cent.
The TSX financial sector was up 1.3 per cent after Ottawa and the governments of Ontario, Quebec and Alberta agreed to "partner" in supporting a restructuring of $32 billion in commercial paper that has been frozen for the past 16 months. National Bank (TSX:NA), pummelled this week because of its ABCP exposure, gained $3.24 or 12.7 per cent to $28.86.
Another bright spot was Research In Motion Ltd. (TSX:RIM), up $6.59 or 14 per cent to $53.32 after the BlackBerry maker posted a 66 per cent surge in quarterly revenue to US$2.78 billion despite a jerky rollout of new smartphones. RIM also issued a jolly outlook for the holiday season and beyond.
Auto parts stocks were mixed after the Bush bailout. Magna International (TSX:MG.A), Canada's largest parts maker, rose 80 cents to $36.24 while Linamar (TSX:LNR) declined 12 cents to $3.54.
Roger Biduk writes:
The Toronto energy sector was up 0.5 per cent as the January crude oil contract, which expired at the end of the session, fell $2.35 to US$33.87 a barrel on the New York Mercantile Exchange, following the previous day's decline of almost US$4 a barrel. But the February contract moved up 69 cents to US$42.36 as the American currency strengthened.
EnCana Corp. (TSX:ECA) fell 60 cents to $53.90. Petro-Canada (TSX:PCA) was ahead 15 cents to $27.05 after a tentative settlement to end a 13-month-old lockout at its Montreal oil refinery, which has been kept running by managers.
Gold moved lower with the February contract in New York down $23.20 to US$837.40 an ounce, but the TSX gold sector rose 3.25 per cent. Kinross Gold Corp. (TSX:G) rose $1.07 to $20.75.
The industrial sector was the biggest weight on the TSX index, with Canadian Pacific (TSX:CP) down $1.48 to $39.75 while Bombardier Inc. (TSX:BBD.B) declined six cents to $4.14.
Potash Corp. (TSX:POT) fell $1.34 to $88.66 after the fertilizer giant lowered its 2008 profit guidance due to wilting demand for crop nutrients in a blighted global economy. PotashCorp also issued layoff notices to more than 900 employees.
The consumer discretionary sector boosted the TSX by the end of the day as media and retail stocks soared. CanWest Global Communications (TSX:CGS.A) advanced 5.5 cents to 45 cents, and Torstar (TSX:TS-B) ran ahead $1.67 to $10.02.
Rona Inc. (TSX:RON) gained $1 to $11.89 and Reitmans Canada (TSX:RET.A) rose $1.38 to $11.13.
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A late-day revival in financials helped push the Toronto stock market higher Friday as a multibillion-dollar taxpayer guarantee is expected to finally end the uncertainty around the asset-backed commercial paper market.
Toronto's S&P/TSX composite index advanced 126.65 points to 8,552.00 for a gain of 37 points this week.
The TSX Venture Exchange ticked 1.41 points lower to 699.04.
The Canadian dollar fell 1.11 cents to 81.77 cents US after Statistics Canada reported the inflation rate dropped to two per cent last month, from 2.6 per cent in October, as gasoline price eased 14.4 per cent.
The TSX financial sector was up 1.3 per cent after Ottawa and the governments of Ontario, Quebec and Alberta agreed to "partner" in supporting a restructuring of $32 billion in commercial paper that has been frozen for the past 16 months. National Bank (TSX:NA), pummelled this week because of its ABCP exposure, gained $3.24 or 12.7 per cent to $28.86.
Another bright spot was Research In Motion Ltd. (TSX:RIM), up $6.59 or 14 per cent to $53.32 after the BlackBerry maker posted a 66 per cent surge in quarterly revenue to US$2.78 billion despite a jerky rollout of new smartphones. RIM also issued a jolly outlook for the holiday season and beyond.
Auto parts stocks were mixed after the Bush bailout. Magna International (TSX:MG.A), Canada's largest parts maker, rose 80 cents to $36.24 while Linamar (TSX:LNR) declined 12 cents to $3.54.
Roger Biduk writes:
The Toronto energy sector was up 0.5 per cent as the January crude oil contract, which expired at the end of the session, fell $2.35 to US$33.87 a barrel on the New York Mercantile Exchange, following the previous day's decline of almost US$4 a barrel. But the February contract moved up 69 cents to US$42.36 as the American currency strengthened.
EnCana Corp. (TSX:ECA) fell 60 cents to $53.90. Petro-Canada (TSX:PCA) was ahead 15 cents to $27.05 after a tentative settlement to end a 13-month-old lockout at its Montreal oil refinery, which has been kept running by managers.
Gold moved lower with the February contract in New York down $23.20 to US$837.40 an ounce, but the TSX gold sector rose 3.25 per cent. Kinross Gold Corp. (TSX:G) rose $1.07 to $20.75.
The industrial sector was the biggest weight on the TSX index, with Canadian Pacific (TSX:CP) down $1.48 to $39.75 while Bombardier Inc. (TSX:BBD.B) declined six cents to $4.14.
Potash Corp. (TSX:POT) fell $1.34 to $88.66 after the fertilizer giant lowered its 2008 profit guidance due to wilting demand for crop nutrients in a blighted global economy. PotashCorp also issued layoff notices to more than 900 employees.
The consumer discretionary sector boosted the TSX by the end of the day as media and retail stocks soared. CanWest Global Communications (TSX:CGS.A) advanced 5.5 cents to 45 cents, and Torstar (TSX:TS-B) ran ahead $1.67 to $10.02.
Rona Inc. (TSX:RON) gained $1 to $11.89 and Reitmans Canada (TSX:RET.A) rose $1.38 to $11.13.
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Thursday, December 18, 2008
Roger Biduk - Bay Street Drops on Oil
Roger Biduk writes:
A wave of pentup selling on the Toronto stock market sent the main index down almost 300 points Thursday as energy stocks sold off and oil headed lower.
Toronto's S&P/TSX composite index closed down 298.76 points to 8,425.35 on heavier than usual volume as the exchange resumed business after being halted Wednesday by a technical problem.
The TSX Venture Exchange was off 23.01 points to 700.45.
Shares in TMX Group (TSX:X), operator of the TSX and TSX Venture Exchange, declined 39 cents to $24.21. The company blamed its day-long halt on "technical issues with data feeds."
The CDN$ was down 0.68 cent to 82.88 cents U.S. Negative economic data kept coming, while Federal Finance Minister Jim Flaherty appointed an 11-member economic advisory council which includes former B.C. finance minister Carole Taylor and businessmen James Irving and Jim Pattison.
The energy sector led TSX losses, falling 7.6 per cent as the January crude contract in New York, which expires Friday, slid $3.84 to US$36.22 a barrel as pessimism about demand outweighed OPEC's decision to cut daily output by 2.2 million barrels. The February contract declined $2.94 to US$41.67.
EnCana Corp. (TSX:ECA), closed down $2.58 to $54.50. Suncor Inc. (TSX:SU) shed $1.91 to $24.80.
Statistics Canada reported its composite leading index fell 0.7 per cent in November. It was the third straight retreat, and the largest since January 1991, for the forward-looking index. Statistics Canada also tallied a sharp 0.9 per cent decline in October retail sales, pulled lower by price reductions.
The TSX financial sector moved down 2.2 per cent as National Bank (TSX:NA) added to its string of losses, down $2.14 to $25.62 while Royal Bank (TSX:RY) surrendered 41 cents to $34.25.
The base metals sector tumbled seven per cent as Teck Cominco Ltd. (TSX:TCK.B) retreated 67 cents to $5.38 and Sherritt International (TSX:S) dropped 38 cents to $11.76.
The gold sector dropped eight per cent as the February bullion contract on the Nymex lost $7.90 to US$860.60 an ounce. Goldcorp Inc. (TSX:G) faded $4.86 to $34.49.
The carmakers' woes pulled down auto parts suppliers. Magna International (TSX:MG.A) was down 26 cents to $35.44 while Linamar (TSX:LNR) dropped 49 cents to $3.66.
Telecom equipment maker Nortel Networks (TSX:NT) was a major loser on the TSX, losing eight cents or 11.8 per cent to 30 cents on continuing worries about the firm's survival.
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A wave of pentup selling on the Toronto stock market sent the main index down almost 300 points Thursday as energy stocks sold off and oil headed lower.
Toronto's S&P/TSX composite index closed down 298.76 points to 8,425.35 on heavier than usual volume as the exchange resumed business after being halted Wednesday by a technical problem.
The TSX Venture Exchange was off 23.01 points to 700.45.
Shares in TMX Group (TSX:X), operator of the TSX and TSX Venture Exchange, declined 39 cents to $24.21. The company blamed its day-long halt on "technical issues with data feeds."
The CDN$ was down 0.68 cent to 82.88 cents U.S. Negative economic data kept coming, while Federal Finance Minister Jim Flaherty appointed an 11-member economic advisory council which includes former B.C. finance minister Carole Taylor and businessmen James Irving and Jim Pattison.
The energy sector led TSX losses, falling 7.6 per cent as the January crude contract in New York, which expires Friday, slid $3.84 to US$36.22 a barrel as pessimism about demand outweighed OPEC's decision to cut daily output by 2.2 million barrels. The February contract declined $2.94 to US$41.67.
EnCana Corp. (TSX:ECA), closed down $2.58 to $54.50. Suncor Inc. (TSX:SU) shed $1.91 to $24.80.
Statistics Canada reported its composite leading index fell 0.7 per cent in November. It was the third straight retreat, and the largest since January 1991, for the forward-looking index. Statistics Canada also tallied a sharp 0.9 per cent decline in October retail sales, pulled lower by price reductions.
The TSX financial sector moved down 2.2 per cent as National Bank (TSX:NA) added to its string of losses, down $2.14 to $25.62 while Royal Bank (TSX:RY) surrendered 41 cents to $34.25.
The base metals sector tumbled seven per cent as Teck Cominco Ltd. (TSX:TCK.B) retreated 67 cents to $5.38 and Sherritt International (TSX:S) dropped 38 cents to $11.76.
The gold sector dropped eight per cent as the February bullion contract on the Nymex lost $7.90 to US$860.60 an ounce. Goldcorp Inc. (TSX:G) faded $4.86 to $34.49.
The carmakers' woes pulled down auto parts suppliers. Magna International (TSX:MG.A) was down 26 cents to $35.44 while Linamar (TSX:LNR) dropped 49 cents to $3.66.
Telecom equipment maker Nortel Networks (TSX:NT) was a major loser on the TSX, losing eight cents or 11.8 per cent to 30 cents on continuing worries about the firm's survival.
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Wednesday, December 17, 2008
Roger Biduk - Technical Problems Shut Down Bay Street
Roger Biduk writes:
The Toronto stock market missed an entire trading day because of a technical problem for the first time in its history Wednesday - and has said only that it intends to reopen at 9:30 a.m. ET Thursday.
Market operator TMX Group Inc. (TSX:X) said its new Quantum trading engine performed flawlessly but data feeds were interrupted, and "because the data feeds provide information to investors to guide their trading decisions, trading was halted to ensure market integrity."
It gave no specifics on the nature of the problem, saying information would be provided when its investigation is complete.
This isn't the first time the Toronto market has closed unexpectedly: it was shut down after the September 2001 terrorist attacks, and about a year before that it collapsed for four hours under a flood of trading in former market heavyweight Nortel Networks.
Judging by the performance of Canadian bellwether stocks interlisted in New York, financials had a negative session a day after the U.S. Federal Reserve cut its key interest rate to between zero and 0.25 per cent amid a worsening economy.
Royal Bank was down 45 cents to US$28.65, CIBC rose 41 cents to US$41.73, Research In Motion Ltd. moved ahead 73 cents to $40.67.
EnCana Corp. fell $1.45 to US$46.36 as the January crude contract on the New York Mercantile Exchange settled $3.54 lower at US$40.06.
The slippage in crude prices came even as the Organization of Petroleum Exporting Countries cut its output quotas by 2.2 million barrels a day. It's the largest-ever one-time reduction as the cartel struggles to support prices that have fallen from a July peak of US$147 a barrel.
The OPEC move came as new data showed U.S. crude oil inventories increased by 500,000 barrels last week
The Canadian dollar added 0.35 cent to 83.56 cents US, after U.S.-dollar weakness had pushed the loonie up two cents Tuesday.
The February bullion contract in New York rose $25.80 to US$868.50 an ounce.
Roger Biduk writes:
In corporate news, Canadian Pacific Railway Co. (TSX:CP) plans 600 temporary layoffs and other cost cuts as freight traffic sags. Its shares ticked ahead nine cents to US$35.15 in New York.
Heavy equipment dealer Finning International Inc. (TSX:FTT) said it is cutting 600 jobs worldwide to "rebalance" its business for the economic downturn.
Insurer Kingsway Financial Services Inc. (TSX:KFS), under pressure from a major shareholder, says it is cutting costs by US$20 million next year.
Quebecor World Inc. (TSX:IQW) said Pierre Karl Peladeau and Erik Peladeau, heirs of founder Pierre Peladeau, have resigned from the commercial printer's board. This comes as former parent company Quebecor Inc., headed by the Peladeaus, sues Quebecor World, which is restructuring under bankruptcy protection.
Health-sciences company MDS Inc. (TSX:MDS) reported a fourth-quarter loss of US$255 million on a big after-tax writedown related to the troubled Maple medical-isotope reactor project. The results are preliminary and do not include another writedown of $270 million to $370 million related to goodwill at its MDS Pharma Services division. Transat AT Inc. (TSX:TRZ) said non-cash and non-operating items drove the travel operator into the red for its 2008 financial year, with a net loss of $50 million. Transat took a $45.7-million writedown on asset-backed commercial paper and a $2.3-million foreign exchange hit.
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The Toronto stock market missed an entire trading day because of a technical problem for the first time in its history Wednesday - and has said only that it intends to reopen at 9:30 a.m. ET Thursday.
Market operator TMX Group Inc. (TSX:X) said its new Quantum trading engine performed flawlessly but data feeds were interrupted, and "because the data feeds provide information to investors to guide their trading decisions, trading was halted to ensure market integrity."
It gave no specifics on the nature of the problem, saying information would be provided when its investigation is complete.
This isn't the first time the Toronto market has closed unexpectedly: it was shut down after the September 2001 terrorist attacks, and about a year before that it collapsed for four hours under a flood of trading in former market heavyweight Nortel Networks.
Judging by the performance of Canadian bellwether stocks interlisted in New York, financials had a negative session a day after the U.S. Federal Reserve cut its key interest rate to between zero and 0.25 per cent amid a worsening economy.
Royal Bank was down 45 cents to US$28.65, CIBC rose 41 cents to US$41.73, Research In Motion Ltd. moved ahead 73 cents to $40.67.
EnCana Corp. fell $1.45 to US$46.36 as the January crude contract on the New York Mercantile Exchange settled $3.54 lower at US$40.06.
The slippage in crude prices came even as the Organization of Petroleum Exporting Countries cut its output quotas by 2.2 million barrels a day. It's the largest-ever one-time reduction as the cartel struggles to support prices that have fallen from a July peak of US$147 a barrel.
The OPEC move came as new data showed U.S. crude oil inventories increased by 500,000 barrels last week
The Canadian dollar added 0.35 cent to 83.56 cents US, after U.S.-dollar weakness had pushed the loonie up two cents Tuesday.
The February bullion contract in New York rose $25.80 to US$868.50 an ounce.
Roger Biduk writes:
In corporate news, Canadian Pacific Railway Co. (TSX:CP) plans 600 temporary layoffs and other cost cuts as freight traffic sags. Its shares ticked ahead nine cents to US$35.15 in New York.
Heavy equipment dealer Finning International Inc. (TSX:FTT) said it is cutting 600 jobs worldwide to "rebalance" its business for the economic downturn.
Insurer Kingsway Financial Services Inc. (TSX:KFS), under pressure from a major shareholder, says it is cutting costs by US$20 million next year.
Quebecor World Inc. (TSX:IQW) said Pierre Karl Peladeau and Erik Peladeau, heirs of founder Pierre Peladeau, have resigned from the commercial printer's board. This comes as former parent company Quebecor Inc., headed by the Peladeaus, sues Quebecor World, which is restructuring under bankruptcy protection.
Health-sciences company MDS Inc. (TSX:MDS) reported a fourth-quarter loss of US$255 million on a big after-tax writedown related to the troubled Maple medical-isotope reactor project. The results are preliminary and do not include another writedown of $270 million to $370 million related to goodwill at its MDS Pharma Services division. Transat AT Inc. (TSX:TRZ) said non-cash and non-operating items drove the travel operator into the red for its 2008 financial year, with a net loss of $50 million. Transat took a $45.7-million writedown on asset-backed commercial paper and a $2.3-million foreign exchange hit.
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U.S. Interest Rate Cut Spurs on Bay Street
Roger Biduk writes:
Stock markets closed sharply higher Tuesday after the U.S. Federal Reserve cut its key interest rate to a range of zero to 0.25 per cent - a record low, and down from the one per cent target in place since October.
In Toronto, the S&P/TSX composite index moved up 262.28 points to 8,724.11 as all sectors except health care turned positive.
The TSX Venture Exchange was up 6.65 points to 723.46.
The Cdn$ rose as much as 2.25 cents and closed with a gain of 2.02 cents at 83.21 cents US. The American currency weakened after the Fed made clear it will flood the system with greenbacks to encourage spending.
The TSX financial group turned positive after the Fed move, rising 1.5 per cent. But Bank of Montreal fell $2.22 or 6.8 per cent to $30.35 following news of a $1-billion-plus stock offering at $30 per share. It was the latest in a series of moves by the big banks to bolster their capital reserves.
Royal Bank (TSX:RY), which floated a $1-billion share issue last week, gained 65 cents to $34.90.
Statistics Canada reported manufacturing sales decreased 1.8 per cent in October to a seven-year low.
The TSX energy sector moved ahead 3.75 per cent although the January crude contract on the New York Mercantile Exchange slipped 91 cents to US$43.60 a barrel. Oil traders appear to have discounted an expected output-quota cut Wednesday by the Organization of Petroleum Exporting Countries.
On the TSX, EnCana Corp. (TSX:ECA) improved $2.87 to $57.82 and Suncor Inc. (TSX:SU) advanced $1.40 to $26.61.
The base-metal sector was up 3.25 per cent with Teck Cominco Ltd. (TSX:TCK.B) ahead 33 cents to $5.98 while Inmet Mining Corp. (TSX:IMN) climbed $1.93 to $19.42.
The industrial group gave major lift to the TSX, rising more than four per cent with Canadian National Railway (TSX:CNR) ahead $2.09 to $44.
The telecom sector was up slightly but Telus Corp. (TSX:T) declined a dime to $34.03 after disclosing it expects next year's operating profit will be flat while revenue grows four to six per cent. Telus also plans to boost capital spending by 12 per cent to $2.05 billion.
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Stock markets closed sharply higher Tuesday after the U.S. Federal Reserve cut its key interest rate to a range of zero to 0.25 per cent - a record low, and down from the one per cent target in place since October.
In Toronto, the S&P/TSX composite index moved up 262.28 points to 8,724.11 as all sectors except health care turned positive.
The TSX Venture Exchange was up 6.65 points to 723.46.
The Cdn$ rose as much as 2.25 cents and closed with a gain of 2.02 cents at 83.21 cents US. The American currency weakened after the Fed made clear it will flood the system with greenbacks to encourage spending.
The TSX financial group turned positive after the Fed move, rising 1.5 per cent. But Bank of Montreal fell $2.22 or 6.8 per cent to $30.35 following news of a $1-billion-plus stock offering at $30 per share. It was the latest in a series of moves by the big banks to bolster their capital reserves.
Royal Bank (TSX:RY), which floated a $1-billion share issue last week, gained 65 cents to $34.90.
Statistics Canada reported manufacturing sales decreased 1.8 per cent in October to a seven-year low.
The TSX energy sector moved ahead 3.75 per cent although the January crude contract on the New York Mercantile Exchange slipped 91 cents to US$43.60 a barrel. Oil traders appear to have discounted an expected output-quota cut Wednesday by the Organization of Petroleum Exporting Countries.
On the TSX, EnCana Corp. (TSX:ECA) improved $2.87 to $57.82 and Suncor Inc. (TSX:SU) advanced $1.40 to $26.61.
The base-metal sector was up 3.25 per cent with Teck Cominco Ltd. (TSX:TCK.B) ahead 33 cents to $5.98 while Inmet Mining Corp. (TSX:IMN) climbed $1.93 to $19.42.
The industrial group gave major lift to the TSX, rising more than four per cent with Canadian National Railway (TSX:CNR) ahead $2.09 to $44.
The telecom sector was up slightly but Telus Corp. (TSX:T) declined a dime to $34.03 after disclosing it expects next year's operating profit will be flat while revenue grows four to six per cent. Telus also plans to boost capital spending by 12 per cent to $2.05 billion.
www.rogerbiduk.ca
www.rogerbiduk.wordpress.com
Sunday, December 14, 2008
Canadian Auto Parts Makers in Big trouble
Roger Biduk writes:
With the "Big 3" needing a bailout or face possible bankruptcy, being a manufacturer supplying parts to them is no joy right now.
Shares of Canadian autoparts makers have taken a beating due to the decline in the U.S. auto sector, but the companies will face a much harsher reality if one or more of the Detroit Three is allowed to fail.
Parts companies already run on razor-thin margins, and a bankruptcy of one of the big automakers would mean suppliers would not be paid. That would lead to a catastrophic chain reaction that would ripple through the industry, said Linda Hasenfratz, president and chief executive of Linamar Corp , in an interview.
"You are looking at shutting down the entire automotive industry in North America," she said.
"Just to be clear on the ramifications, not just Ford , General Motors and Chrysler ... but everybody. Everybody goes down, because really, you are only as strong as the weakest link in the chain, and some of the weakest links in this chain are the suppliers."
More than 65 percent of suppliers to Ford, GM and Chrysler, also supply Toyota Motor Co and Honda Motor Co , so even the offshore-based manufacturers would be hard hit.
Worries of a bankruptcy of one or all of the Detroit Three are reflected in Linamar's share price, which is down 79 percent since the beginning of the year.
At C$4.20, it is now on the verge of being removed from the S&P/TSX composite index due to failure to meet listing requirements, which include maintaining a certain level of market capitalization and volume.
No Canadian autoparts manufacturer has escaped seeing its stock being clobbered this year. Magna International Inc is down 56 percent at C$35.76, and Martinrea International Inc is down 84 percent at C$1.94.
Thirty-five percent of Linamar's sales go to the Detroit Three, according to RBC Capital Markets. For Magna, that number jumps to 52 percent, and it's about 80 percent for Martinrea.
Michael Willemse, an analyst at CIBC World Markets, said sales volumes would likely decline further for U.S. car sales -- they fell 37 percent in November alone -- on a Detroit Three bankruptcy.
"If one or all three of the Big Three go bankrupt, I would expect sales volumes to decline because customers would be nervous about buying a vehicle by a bankrupt OEM (original equipment manufacturer)," he told Reuters.
Willemse wrote in a note, after the U.S. Senate rejected a $14 billion auto bailout bill late Thursday, that the risk of bankruptcy at each of the Detroit Three had become more likely, with Chrysler in danger of folding within the next few weeks.
Many in the industry have also said that GM will not make it into the new year without government support.
Stock markets on Friday reacted negatively to news the U.S. Senate had killed the auto aid bill, but they bounced back strongly within minutes of the U.S. government saying it may use some of the money set aside in the $700 billion earmarked for fiscal relief to help the beleaguered auto sector.
Richard Cooper, vice-president of Canadian operations at industry consultant JD Power and Associates, said he believes some sort of aid will be made available, but that will only be the beginning of a long process to bring the companies back from the brink of liquidation.
A bailout "is really only survival for the next few weeks or so," he said.
The next phase would be restructuring. In Canada, the shares of autoparts makers would likely remain depressed, as U.S. sales aren't expected to pick up any time soon, and there is a lot of uncertainly about what the automakers and the government have been planning.
"That kind of uncertainly is really taking it's toll in the market right now," said Cooper.
www.rogerbiduk.ca
www.rogerbiduk.wordpress.com
With the "Big 3" needing a bailout or face possible bankruptcy, being a manufacturer supplying parts to them is no joy right now.
Shares of Canadian autoparts makers have taken a beating due to the decline in the U.S. auto sector, but the companies will face a much harsher reality if one or more of the Detroit Three is allowed to fail.
Parts companies already run on razor-thin margins, and a bankruptcy of one of the big automakers would mean suppliers would not be paid. That would lead to a catastrophic chain reaction that would ripple through the industry, said Linda Hasenfratz, president and chief executive of Linamar Corp , in an interview.
"You are looking at shutting down the entire automotive industry in North America," she said.
"Just to be clear on the ramifications, not just Ford , General Motors and Chrysler ... but everybody. Everybody goes down, because really, you are only as strong as the weakest link in the chain, and some of the weakest links in this chain are the suppliers."
More than 65 percent of suppliers to Ford, GM and Chrysler, also supply Toyota Motor Co and Honda Motor Co , so even the offshore-based manufacturers would be hard hit.
Worries of a bankruptcy of one or all of the Detroit Three are reflected in Linamar's share price, which is down 79 percent since the beginning of the year.
At C$4.20, it is now on the verge of being removed from the S&P/TSX composite index due to failure to meet listing requirements, which include maintaining a certain level of market capitalization and volume.
No Canadian autoparts manufacturer has escaped seeing its stock being clobbered this year. Magna International Inc is down 56 percent at C$35.76, and Martinrea International Inc is down 84 percent at C$1.94.
Thirty-five percent of Linamar's sales go to the Detroit Three, according to RBC Capital Markets. For Magna, that number jumps to 52 percent, and it's about 80 percent for Martinrea.
Michael Willemse, an analyst at CIBC World Markets, said sales volumes would likely decline further for U.S. car sales -- they fell 37 percent in November alone -- on a Detroit Three bankruptcy.
"If one or all three of the Big Three go bankrupt, I would expect sales volumes to decline because customers would be nervous about buying a vehicle by a bankrupt OEM (original equipment manufacturer)," he told Reuters.
Willemse wrote in a note, after the U.S. Senate rejected a $14 billion auto bailout bill late Thursday, that the risk of bankruptcy at each of the Detroit Three had become more likely, with Chrysler in danger of folding within the next few weeks.
Many in the industry have also said that GM will not make it into the new year without government support.
LOANS OR BAILOUT COMING - BUT WHAT AFTER?
Stock markets on Friday reacted negatively to news the U.S. Senate had killed the auto aid bill, but they bounced back strongly within minutes of the U.S. government saying it may use some of the money set aside in the $700 billion earmarked for fiscal relief to help the beleaguered auto sector.
Richard Cooper, vice-president of Canadian operations at industry consultant JD Power and Associates, said he believes some sort of aid will be made available, but that will only be the beginning of a long process to bring the companies back from the brink of liquidation.
A bailout "is really only survival for the next few weeks or so," he said.
The next phase would be restructuring. In Canada, the shares of autoparts makers would likely remain depressed, as U.S. sales aren't expected to pick up any time soon, and there is a lot of uncertainly about what the automakers and the government have been planning.
"That kind of uncertainly is really taking it's toll in the market right now," said Cooper.
www.rogerbiduk.ca
www.rogerbiduk.wordpress.com
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