Thursday, June 29, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): Bay Street felt very bullish today, as it rallied on the U.S.
Federal Reserve Board decision to raise interest rates for the 17th
straight time by 25 basis points--right in line with analysts' predictions.
Other economic reports, including the GDP on both sides of the border, were
also in focus, as was continued M&A activity. Resource-related stocks
posted the bulk of today's gains.
* The S&P/TSX Stock Exchange Composite Index rallied 188.59 points, or
1.66%.
* Economic reports were abundant today. The U.S. Federal Reserve Board
added a 1/4 point to create a 5.25% interest rate. This allayed fears of a
higher hike; although, the committee also judged that "inflation fears
remain." The combination of this belief contrasted with a swift rise in the
U.S. GDP leads marketers to believe a further rate decision might be made
in August.
* Meanwhile, a sharp improvement in the trade deficit helped America's
GDP jump 5.6% in the opening quarter, as it recovered from the slow,
hurricane- troubled fourth quarter of 2005. This matched analyst's
forecasts and beat the initial estimate of 5.3%. Economists predict,
however, that high energy prices and a slowdown in the housing market may
slow down the second quarter's growth.
* On the Canadian economic front, April GDP edged up 0.1%, the same as
March's and half the rate analysts had predicted. The service sectors led
the increase with a 0.3% jump, but were restrained by lower figures in
utilities, construction, and manufacturing; mining and oil and gas
exploration were also down. Statistics Canada concluded that the GDP
totaled C$1.1 trillion overall.
* The Raw Materials Price Index was up 5.6% from April to May, after a
5.7% increase from March to April. Statistics Canada mentioned higher oil
and metal prices that pushed up primary metal and petroleum products. It
also disclosed that the Industrial Product Price Index was up 0.3% from
April to May.
* Teck Cominco declared it would not raise its C$17.8 billion bid for
Inco. The mining company is biding its time, waiting for the result of the
Falconbridge/Xstrata acquisition battle and its repercussions on the US$40
billion Phelps Dodge offer for Inco and Falconbridge early this week. Teck
Cominco believes its Canadian-ness should be taken into consideration
before Investment Canada approves the deal from the US copper giant.
* Moving to the oil sector, Petro-Canada boosted its bid for Canada
Southern Petroleum Ltd. to US$11 per share. The small Canada Southern has
other suitors, including Canadian Superior Energy and Canadian Oil Sands;
the latter also has the legal right to match Petro-Can's bid.
* U.S.-based Anadarko Petroleum Corp. has decided to sell all of its
Canadian operations, worth an estimated C$4 billion, to help finance its
takeover of two smaller American companies. The action is expected to
generate a fierce bidding war as the properties generate about 70,000
barrels of oil a day, and also contain many shallow natural gas deposits
that are expected to attract companies like Talisman Energy Corp. and ARC
Energy Trust.
* Technology shares receded today, despite strong gains posted by
Nortel. The firm's chairman said the firm is not for sale, despite a recent
wave of mergers in the telecommunications field. He pledged a "turnaround"
that would take two to three years at the shareholders' annual meeting in
Toronto. Investors also voted for a reverse stock split.
-- Carolyn.Crapo@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
the right to update our reports. For more financial information at your
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SOURCE Thomson Financial Corporate Group
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