Tuesday, September 19, 2006, 4:15 PM ET (Thomson Financial Corporate
Services): The TSX rode a wild roller coaster of news today, from the
expected (Canadian inflation figures meeting predictions, American producer
prices lessening rate hike fears) to the unwelcome surprises (a crash for
Yahoo following an earnings warning, a sharp downturn in new housing starts
in the U.S.). However, the biggest shock was the apparent fall of the
government of Thailand, triggering memories of the 1997 Asian currency
crisis, which began with the baht's devaluation. The gold sector reversed
on the reports and oil streaked down, dragging with it indices that had
been ticking up on the good news about inflation in Canada.
* The S&P/TSX Stock Exchange Composite Index fell 61.84 points, or
0.53%.
* In economic news, the markets were pleased to have their forecasts
realized as inflation eased in Canada in August, climbing at a rate of only
2.1% after last month's 2.4% rise. This is the third time in a row the
figure has dropped, the longest stretch in two years, and the Bank of
Canada is now widely expected to hold the rates again at its next meeting
on October 17th, if not throughout the fall. The drop was attributed mainly
to lower gasoline prices towards the end of summer; although gas prices
still rose 9%. Core inflation, which excludes eight volatile industries,
was unchanged at 1.5%.
* U.S. producer prices for finished goods ticked up 0.1%, missing
expectations of a 0.2% rise, while core prices dropped by 0.4%, the biggest
decline since April 2003. The Dept. of Labor reported this was largely due
to a 2.6% fall in auto prices and 3.4% price drop in light trucks and SUVs.
Two other factors involved were energy prices at the producer level, which
ticked up by 0.3% after surging 1.3% in July, and an increase in food
prices by 1.4%. The report bolstered the increasingly popular view that the
Fed will hold rates not only at its meeting tomorrow, but for the rest of
the year.
* U.S. housing starts data rattled the markets as figures, which were
estimated to be down 3.0%, instead tumbled 6.0%, declining from a revised
3.3% dip in July. August saw only 1.665 million starts, with increases only
in the Northeast.
* UBS Securities Canada has raised its TSX target to 13,250 from
12,750, an increase of 4%. It is currently advising clients to shift more
money to stocks. Dismissing fears of a North American economic slowdown,
UBS forecasts TSX composite profits will rise 22% in 2006 and 20% in 2007
for Bay Street.
* Pengrowth Energy Trust announced plans to buy a gas-processing plant
and several energy properties in Alberta from ExxonMobil for C$475 million.
* Research In Motion boosted the tech sector as it was upgraded by
Needham to a "buy", and also entered into deals to launch its new
BlackBerry and other devices in Japan and India.
* BCE has filed for an IPO for Telesat Canada, selling its stake (worth
US$400 million) as part of its strategy to "slim down" and concentrate on
its core holding, Bell Canada.
* After a small boost in midday, gold was caught up in the day's
turmoil and plunged US$9.60, closing at US$583.20.
* Oil began the day higher up as traders absorbed the Thunder Horse
platform delay news, but soon dipped on reports of larger global
inventories and comments from the president of OPEC lessening fears of a
production cut. Prices then tumbled on news of the Thai coup, ending at the
lowest levels since last December, closing at US$61.66, down US$2.41.
* This afternoon, the Ontario Divisional Court denied Sears Holding's
appeal against the decision of the OSC that their acquisition of Sears
Canada should not proceed, due to its "abusive" treatment of shareholders.
The three-judge panel ruled that Sears Holdings could not buy the minority
shares it needed to get the 46% of the company it does not yet own and take
it private.
-- 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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