Wednesday, September 6, 2006, 4:15 PM EST (Thomson Financial Corporate
Services): Bay Street suffered a triple-digit drop today as it took in
mixed economic data from both sides of the border, alongside a steep slide
in the energy sector. While the national bank held the lending rate steady
as expected, both it and the Fed's Beige Book report noted slowdowns that
worried investors. On the corporate front, Nortel, Rogers, Blue Pearl, and
RBC all announced lucrative deals.
* The S&P/TSX Stock Exchange Composite Index plunged 198.89 points, or 1.63%.
* The Bank of Canada held the lending rate steady at 4.25% as expected,
for the second consecutive time. The BoC noted that the slowdown in its
southern neighbor has now affected Canada. The next rate announcement is
scheduled for October 17.
* U.S. productivity and wage figures have been released for the second
quarter, revealing a spring slowdown in productivity, while wages rose. The
nonfarm sector posted a 1.6% annual rate, better than the 1.1% rise
estimated a month ago, but well below the 4.3% gain in first quarter.
* The Beige Book was also released by the New York Fed; in summary,
five of twelve regions, mostly in the Northeast, reported a "deceleration"
in growth, while the other seven reported moderate growth. Costs went up in
raw materials, energy, and metals, but do not seem to have filtered down to
average consumer products yet. Autos and home improvement items sold
sluggishly, and consumer spending increased, but very slowly. There was a
marked weakness in most residential real estate markets, but inflationary
pressures were not present, supporting the main Fed's decision to pause
interest rates (although rising labour costs may make them reconsider.
* Nortel announced a number of takeover possibilities and deals in
Europe with companies like Siemens (which they had also started a project
with earlier this summer). Arrangements were made with companies in Russia,
Greece, Britain, and Switzerland; no prices or details were given, but
Nortel is looking for companies to assist in spreading its new technologies
worldwide.
* In telecom, Rogers Communications is forming a partnership with Maple
Leaf Sports and Entertainment, becoming its preferred cable supplier and a
platinum-level sponsor for its sports teams like the Toronto Raptors, Maple
Leafs, and Toronto Marlies. No financial terms were disclosed for the deal,
in which Rogers edged out suitors like Bell Canada.
* Canada's biggest bank, the Royal Bank of Canada, is buying American
Guaranty & Trust from National Life Group. Financial details were not
disclosed. The acquisition of the firm, which manages more than US$1.3
billion in personal trusts and investments, is part of RBC's expansion into
America.
* A day after the world learned of the merger of two huge Russian
aluminum producers, Alcan and Alcoa were downgraded by a Citigroup analyst,
who cited falling aluminum prices and Chinese competition. Citigroup
expects "further erosion" in 2007-08.
* Blue Pearl Mining is to acquire Thompson Creek Metals for US$575
million, taking its operations in British Columbia, Idaho, and
Pennsylvania. Blue Pearl will then become one of world's largest producers
of molybdenum, a non- corrosive metal used in high-grade steel products.
* A new tropical storm has formed in the Atlantic and acquired a name:
Florence. But the storm is too far east to predict a track to the Gulf, in
which an oil rig felled by Katrina last year is not only back online, but,
according to owner Shell, pumping 20% more than it did before the
hurricane. Oil fell yet again, as the summer driving season ended, and the
Iranian nuclear enrichment talks were postponed again. October crude was
down 1.6%, or US$1.10, to end at US$67.50 per barrel.
* Gold retrenched a bit in the morning but then lost momentum by close,
as the dollar dipped, oil went down, and traders locked in their profits in
the yellow metal. Gold prices settled down US$5.10 to close at US$641.80.
-- 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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