Wednesday, May 10, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): Canadian stocks declined as technology and mining shares fell.
In the U.S., shares also traded lower after the Federal Reserve raised
interest rates and hinted at the possibility of another hike.
* The S&P/TSX Stock Exchange Composite Index slipped 11.90 points, or
0.10%.
* In the U.S. economic headlines, the Fed upped rates by a quarter
point in a widely anticipated move. This was the 16th hike in a row,
bringing the rate from 4.75% to 5.00%, the highest level in more than five
years. The committee said that it "judges that some further policy firming
may yet be needed to address inflation risks but emphasizes that the extent
and timing of any such firming will depend importantly on the evolution of
the economic outlook as implied by incoming information."
* Turning to local economic data, March new-home prices were 7.6%
higher in March than a year earlier, marking the largest annual increase
since January 1990, Statistics Canada reported. On a monthly basis, the new
housing price index 1%, with prices advancing in 14 of the 21 metropolitan
areas surveyed. Booming Calgary saw another huge gain, with prices rising
5.9% from a month earlier and 29.6% from a year earlier. "High demand for
new housing, coupled with higher material and labor costs and a shortage of
serviced lots, were cited as the main reasons for this increase," the
report said.
* In commodities, June gold futures rose as high as US $706.80 an ounce
in electronic trading, the highest since September 1980, before pulling
back somewhat. Gold shares moved higher alongside the yellow metal.
* Crude oil prices initially declined, before ending slightly higher,
on the weekly U.S. inventories report, which showed a second week of
increased gas reserves. The Energy Department said gasoline inventories
jumped by 2.34 million barrels to 205.1 million in the week ended May 5;
analysts had expected a rise of only 1 million barrels.
* In corporate news, Centurion Energy International Inc. fell after the
company reported that the first drilling results outside of the El Wastani
field area in Egypt were "disappointing."
* Industrial issues moved higher on the day. ACE Aviation Holdings Inc.
is considering spinning off its Air Canada unit, the country's largest
airline, the Globe and Mail reported. ACE rallied on the news.
* In the U.S., Cisco Systems reported a slight drop in quarterly profit
but still beat Wall Street estimates; however, the company's conservative
outlook unnerved analysts and investors and shares ended lower on the
announcement. Separately, Walt Disney Co. finished higher after the media
giant surprised analysts with better-than-expected earnings.
-- Michael.O'Brien@contractor.thomson.com; Thomson Financial Corporate
Services
This is Thomson Financial Corporate Services 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
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SOURCE Thomson Financial Corporate Group
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