Canadian Market Turns Higher

Canadian Market Turns Higher

Wednesday, January 12, 2005, 4:15 PM EST (Thomson Financial Corporate Group): Toronto stocks did a serious reversal from their early slump, finishing slightly higher. The trade surplus for November was much higher than expected, bolstering the loonie. Meanwhile, the U.S. trade deficit reached a record high. Technology stocks jumped, as U.S.-based Intel posted stronger- than-expected earnings and provided a promising capital spending outlook for 2005. Energy stocks rallied, boosted by a jump in oil prices. Still, the financial, healthcare and real estate sectors tumbled.

* The S&P/Toronto Stock Exchange Composite Index edged up 2.02 points, or 0.02%.

* On the economic front, the trade surplus leapt to a near record C$7.3 billion in November. Economists expected a surplus of only C$4.35 billion. October's surplus figure was upwardly revised to C$5.21 billion. Imports plunged 10.2% to C$27.41 billion, boosting the surplus. Meanwhile, the U.S. trade gap widened 7.7% to US$60.30 billion in November. Economists had expected a smaller deficit of US$53.60 billion.

* Topping U.S. chip reports, Intel's fourth-quarter profit landed US$0.02 ahead of the mean Thomson First Call estimate. Sales were up 9.8% to US$9.60 billion from last year amid strength across its businesses. In a positive sign for chip equipment makers, Intel said capital spending for 2005 is expected to be between US$4.9 billion and US$5.3 billion, well above the US$3.8 billion spent in 2004.

* Nortel Networks relinquished some of the gains earned yesterday when it released its financial restatements for 2003. Also, Desjardins upgraded Nortel to "buy" from "hold," while National Bank and Scotia lifted their price targets on the firm. Elsewhere, Research In Motion rallied, after Goldman Sachs raised its rating on the telecom equipment sector and was bullish on RIM. Also, Certicom Corp. surged, after it licensed its intellectual property portfolio of patents to General Dynamics C4 Systems, a unit of General Dynamics, under a 15-year deal.

* Telecom issues advanced. Morgan Stanley initiated coverage of Telus with an "overweight" rating and a US$31 price target. The brokerage cited Telus' superior free cash flow as part of the reasoning behind the coverage.

* CanWest Global Communications leapt, after CIBC, BMO and National Bank lifted the firm's price target, following the firm's upbeat quarterly results, reported yesterday. Also, CanWest CEO Leonard Asper said in a conference call yesterday that the firm is considering a deal with Metro International SA to offer free commuter newspapers in certain Canadian markets.

* Elsewhere, Molson Inc. surged, after London-based SABMiller said it would be interested in a potential deal with the firm if its merger with Adolph Coors fails. Separately, Jean Coutu Group tumbled, after the firm said that it filed a Notice of Default for failing to file its financial statements for the second quarter on time.

* Within the healthcare space, Dimethaid Research was active. The Globe and Mail reported that problems surrounding arthritis drugs Vioxx and Celebrex may provide Dimethaid's Pennsaid with an opportunity for greater market share. The firm is expected to report that Pennsaid sales rose 11% in October and then 26% in November, both on a sequential basis.

* Gold shares turned lower on the session, despite strength in the yellow metal as the greenback weakened in the face of a record U.S. trade deficit. In corporate reports, Cambior announced gold production of 694,100 ounces in 2004, a 33% leap over 2003's figure. Also, Goldcorp said its 2004 gold production was up 4% year-over-year. Queenstake Resources' gold production at the Jerritt Canyon Mine was below expectations in the fourth quarter.

* Separately, oil prices moved higher, following a mixed U.S. weekly inventory report. According to the U.S. Energy Information Administration, crude oil stocks declined by 3 million barrels last week, while distillate inventories rose by 1.9 million barrels. Traders also focused on potential production cuts from OPEC and disruptions in production in the North Sea. In corporate news, Talisman Energy reported first production from the offshore Angostura field in Trinidad and Tobago. Ivanhoe Mines initiated a resource- delineation drilling program in the Nariin Sukhait area. Separately, Haywood cut its price target for High Point Resources to C$2.00 from C$2.50.

* Alcan receded, after BB&T Capital Markets lowered its fourth quarter, 2005 and 2006 estimates due to further cost pressures from currencies and key raw materials. Still, Desjardins raised Alcan's price target to US$53 from US$46.80.

-- Linda.Shea@thomson.com; Thomson Financial Corporate Group

This is Thomson Financial Corporate Group's Canadian Commentary,which is updated twice daily. The information herein is believed to be true and accurate, we take no responsibility for inaccurate information and reserve the right to update our reports. For more financial information at your fingertips, please visit www.irchannel.com. If you have any questions please e-mail James Sang at james.sang@tfn.com or call 646.822.6233 For more information about Thomson Financial visit us on-line at http://www.thomsonfinancial.com/.

PRNewswire -- Jan. 12


Source: Thomson Financial Corporate Group

Web site: http://www.thomsonfinancial.com/


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