Friday, September 1, 2006, 4:15 PM ET (Thomson Financial Corporate
Services): As the Labour Day holiday weekend approached, the North American
markets were quiet, although lifted by receiving better U.S. job news than
expected, which allayed rate hike fears. Nortel and Intel buoyed tech
stocks in their countries, but Toronto's Apotex reeled at a ruling from an
American court that barred its sales of generic Plavix. Miners went back to
work at the Escondida copper mine in Chile as oil and gold both closed down
for the long weekend. Finally, the Inco epic moved forward again as
Brazil's CVRD said it had received official Canadian and U.S. approval for
its bid.
* The S&P/TSX Stock Exchange Composite Index climbed 71.32 points, or
0.59%.
* Apotex suffered a setback when a U.S. District Court ruled in favor
of Bristol-Myers-Squibb and the French Sanofi-Aventis to stop sales of
generic Plavix, a blood thinner and the world's second best-selling
prescription drug. Apotex had been looking forward to six months when it
would have had the sole rights to sell the drug, and plans to appeal the
decision. BMS and Sanofi both lowered their 2006 earnings forecasts, and
had argued successfully that Apotex would not, as it had said, been able to
invalidate the drug's patents.
* The markets were buoyed as U.S. payrolls grew modestly in August.
Hiring rose by 128,000 jobs, lowering the unemployment rate to 4.7%,
compared to July's 4.8%. Since predictions had been for 120-125,000 new
jobs, the figures reassured the markets that Fed's hold on interest rates
would probably continue. BMO Nesbitt Burns economist Michael Gregory
remarked, "The U.S. economy is slowing, holding job growth to a modest pace
which, in turn, is keeping wage inflation in check. This is just what
Bernanke ordered, and the Fed should remain in pause mode for the
foreseeable future." Meanwhile, wages grew over the year ending in August a
robust 3.9%, but with a 0.1% increase in hourly wages in July, well below
the .3% expected.
* The tech sector got a boost from two majors for entirely different
reasons: Nortel sold a unit of its mobile phone business to France's
Alcatel for US$320 million, as the Canadian giant intends to focus more on
its core assets; its UMTS business had been lagging behind its rivals in
North America, but is one of Alcatel's specialties. Intel rose when it
announced it will have to lay off 10,000 people or more at sites around the
world.
* In telecom news, the Canadian Radio-Television and Telecommunications
Commission ruled today that VoIP (voice over Internet) services will
continue to face regulation. The CRTC's regulatory framework, designed to
control big companies so newcomers could enter the field, will stay in
place despite the wishes of the larger players.
* Harley "three-wheeled hogs" or trikes, are to be made in Canada,
announced Harley-Davidson and Lehman Trikes today. The Westlock,
Alberta-based Lehman will make the HD-branded trikes on Harley platforms
and sell them at Harley dealers. Lehman's stock rose by 206.7% on the news.
* Gold markets had a quiet trading day, rising US$0.70 to close at
US$633.30.
* Meanwhile, the US$8.6 billion Goldcorp-Glamis merger announced
yesterday was opposed by some investors, including Goldcorp's founder and
retired CEO Rob McEwen. Mr. McEwen is trying to schedule a vote for
shareholders.
* Crude dropped below US$70 once again as summer driving season drew to
a close and the international community did not indicate a quick decision
on the Iran issue, ending the week at US$69.19, down US$1.07.
-- 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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