Tuesday, July 18, 2006, 4:15 PM ET (Thomson Financial Corporate
Services): Largely favourable earnings news from the States and major deals
involving Nortel and Encana were not quite enough to keep Bay Street
afloat, as gold sector shares dropped sharply. Merrill Lynch, United
Technology, and Coca-Cola all beat earnings expectations but did not enjoy
a big bounce on the Dow, which rose slightly. The tech and mining sectors
got a boost in Toronto. The markets are now waiting to hear earnings from
IBM after trading hours today and Inco tomorrow.
* The S&P/TSX Stock Exchange Composite Index slipped 8.93 points, or
0.08%.
* Inco decided to move up its second-quarter earnings report from July
25th to tomorrow, eight days before July 27th, when its just-sweetened bid
for Falconbridge expires and the latter also loses its poison pill option.
Xstrata's chairman, meanwhile, is poised to pounce on the shares if and
when they reach the open market on the 28th, and made it clear he wants to
own 100% of Falconbridge rather than the 20% he has now. Echoing the head
of Falconbridge, the CEO of Inco, Scott Hand, told investors, "This is a
hell of a good offer. People should be tendering on the 27th ... I would
urge the Falconbridge shareholders to get on the bandwagon and move on."
Inco also is offering a special one-time dividend to Falconbridge
shareholders of C$0.75 per share - but it will not go to those who vote for
the Xstrata bid.
* Sun Life Financial signed a deal in China to distribute their
"enterprise annuities," resembling corporate pension or 401K plans, with
one of the largest state-owned banks in the county. Sun Life is already one
of the top- ten life insurers in the market, and its team-up with the China
Everbright Group will open the door to a retirement fund market that is
expected to grow from C$13 million to C$55 billion in the next four years.
* Technology stocks rallied today, firmly supported by giant Nortel
Networks on news it signed a four-year deal with Microsoft to "accelerate
the delivery of unified communications," according to Nortel chief Mike
Zafirovski. The companies plan to combine Nortel's networking experience
with Microsoft's software to create new solutions in e-mail, instant
messaging, conferencing, and telephony. Mr. Zafirovski estimated that the
partnership would generate more than C$1 billion in sales.
* The city of Wood Buffalo, Alberta, has asked for a delay of a year
for government approval of Suncor's Voyaguer project, which would boost the
company's daily production of bitumen from 260,000 barrels per day to
550,000 by 2012. The region is arguing that the infrastructure,
particularly medical facilities, cannot take the influx of workers, and to
promise that Voyaguer will comply with the Oil Sands Conservation Act.
* As the markets worry about stability in the oilfields of the world,
eyes are turning to the Danish territory of Greenland, which is estimated
to have huge fields of gallons of offshore crude. However, harsh weather
and a strong environmental movement have hampered extensive exploration
since the 1970s. Encana has just won the first license for offshore gas and
oil research in the Disko Bay area off the capital city, Nuuk, according to
Oil Minister Joergen Waever; it hopes to find deposits worth C$400 million
to C$1.2 billion.
* The market for yellow metal dropped so steeply that the precious
metals sector downturn rippled through the entire TSX. As investors grabbed
their gold profits and poured them into other safe havens, like the U.S.
dollar and treasury bonds, gold plunged to US$629.50, down 3.44%.
* Food and energy prices helped swell U.S. producer prices 0.5% in
June. Core prices, however, rose only 0.2%. The data dampened hopes that
the Fed might conclude inflation was not rising enough to justify an 18th
consecutive rise in interest rates. Chairman Benjamin Bernanke is
testifying before Congress tomorrow, and analysts will be combing his words
for hints of the Fed's direction.
-- 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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