Tuesday, August 8, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): The Canadian markets returned after the long Civic Day weekend
to a day full of news, as oil prices had spiked the day before on news of
BP's closing of half its Prudhoe Bay pipelines indefinitely due to a leak,
and markets worldwide waited for the Fed's decision on interest rates. A
smattering of good earnings reports from small mining and energy companies
spurred an early energy sector rally, but, when the Fed issued its
statement holding rates, its wording perplexed the markets, causing them to
ebb in the afternoon.
* The S&P/TSX Stock Exchange Composite Index advanced 61.50 points, or 0.52%.
* The U.S. Federal Reserve Bank issued an 9-1 decision that interest
rates were to be held steady at 5.25%, the first break after seventeen
consecutive rate hikes. The Fed mentioned that inflation indicators
(including new figures today showing U.S. productivity had dropped while
labour costs went up) were not as strong as had been feared, and the
futures market even began to hedge that the rate would also hold steady in
September.
* Canadian Oil Sands changed the conditions of its friendly, C$13.10
bid for natural gas explorer Canada Southern Petroleum, lowering its
minimum position to just 50.1% instead of 67%, after getting about 45% of
the shares tendered. The oilsands exploration company hopes to hold off
hostile bids from Petro- Canada and Canadian Superior Energy.
* French oil giant Total SA admitted it must push back the startup for
its new oil sands project from 2010 to 2013, since the same high oil prices
that make the project worthwhile are also creating a boom in labour and
equipment costs. Its Canadian partner, Enerplus Resources, dropped slightly
at the news.
* Bristol-Meyers is eyeing a possible Canadian rival to its blood
thinner Plavix from Apotex's generic version, which Apotex plans to sell
before the primary patent for its chief ingredient expires in 2011.
* An extra comma has probably cost Rogers Communications C$2.13
million. Its agreement with Aliant Inc. to string Rogers' cable lines
across their 9,000+ utility poles in the Maritimes was worded, so Rogers
thought, as an ironclad five-year contract locked at a certain price.
Aliant maintained that the agreement could instead be cancelled with a
year's notice, which they proceeded to do. The CRTC this week sided with
Aliant, concluding that the placement of the second comma meant Rogers did
not have protection from rate increases that could total over C$2 million.
Ironically, most of those proceeds will instead actually go to the New
Brunswick utility company that owns the poles after having leased them at
the time to Aliant.
* As its M&A saga winds on, Inco is seeking permission from the courts
to call a shareholder meeting on Sept. 7th to consider the Phelps Dodge
offer. Inco
rejected Teck Cominco's raised Monday bid, wanting to see if it would
sweeten it further. Teck on Tuesday said that would be unlikely.
* First Quantum Minerals posted a second-quarter profit of US$150.5
million, or US$2.33 per share, a massive jump of 419% over US$29 million,
or US$0.47 a share, last year. The company pointed to a 68% leap in
production and a large rise in the price of copper.
* Crude markets quieted down after yesterday's sharp rise when
substitutes for the missing heavy crude from Prudhoe Bay were arranged from
Venezuela and the Middle East, and BP announced the pipelines would come
back online in January of 2007.
* Gold edged down US$2.20 to close at US$657.30, as AngloGold Ashanti
cast a vote of confidence in the market by announcing it would leave a
larger amount of its production-87%-unhedged, compared to 75% at present.
-- 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
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SOURCE Thomson Financial Corporate Group
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