Wednesday, September 20, 2006, 4:15 PM ET (Thomson Financial Corporate
Services): Falling crude oil prices once again lowered the TSX, as robust
American inventories were reported and demand slowed. However, in tech and
finance, the market enjoyed healthy earnings news from Oracle and Morgan
Stanley, and predictions of a threefold increase in earnings from Inco. The
expected decision of the Federal Reserve to hold interest rates steady
buoyed the U.S. market.
* The S&P/TSX Stock Exchange Composite Index fell 66.32 points, or
0.57%.
* The Federal Open Market Committee, as widely expected, left the key
U.S. interest rate unchanged at 5.25%, as it responded favorably to data
that indicated that inflation was under control. The vote was 10-1, with
Richmond Fed President Jeffrey Lacker again dissenting. Falling energy
prices and the housing market slowdown were believed to be the key factors.
The hold this month and in August were a break from seventeen consecutive
increases. However, the Committee warned that, for its October meeting, it
was looking carefully at incoming data as "some inflation signs
remain[ed]," and the annual core CPI remained at an above-target 2.8%.
* The energy sector pressured the broader Canadian market today. Crude
prices dropped again as figures showed a healthy U.S. reserve. The fact
that airlines and shipping are not creating their usual high fall demand as
the economy slows is also a problem for the industry. The Energy Department
reported crude oil supplies declining by 2.8 million barrels -- but this is
5% above last year's figure and well above the five-year average for the
month. Gasoline increased by 6% over last year's levels, by 600,000
barrels. Distillate, however, soared by more than 4 million barrels, or
more than 11%; it was this last figure, showing that heating oil should not
stop flowing no matter how cold the winter, that helped pushed down oil
prices to US$60.46, down US$1.20.
* The Canadian tech sector was boosted when U.S.-based Oracle posted a
29% jump in profits. The firm reported its fiscal first-quarter profit was
a record US$670 million, or US$0.13 per share, compared with US$519
million, or US$0.10 per share, a year ago. Revenue for the three months
ending August 31 was a record US$3.59 billion, up nearly 30% from US$2.79
billion in the year- ago period, thanks to lucrative contracts with
Wal-Mart and other retailers.
* In other earnings news, American banking giant Morgan Stanley gave a
similar boost to Financials as it posted a better-than-expected
third-quarter net profit of US$1.85 billion, or US$1.75 per share, as
revenue rose 15% to US$7.99 billion.
* As it waited for CVRD's September 28th decision about a takeover,
nickel giant Inco forecast record adjusted net earnings of between US$610
to US$630 million, or US$2.66 to US$2.75 per diluted share, more than 44%
above current analyst's targets of US$1.88 and three times the net earnings
per share for the third quarter last year. However, the company also
announced lower production figures in some Ontario and Manitoba mines due
to equipment breakdowns, and an ongoing strike in Voisey Bay in Labrador.
* Gold recovered some of its recent losses as the metals and mining
sector took their gains, closing up US$3 at US$586.20.
* The Thai baht fell as the country's military took over and closed the
financial markets. However, the IMF's Rodrigo Rato said that the Fund was
watching the region carefully but "Thailand's economy is fundamentally
strong." Japanese markets dropped but Hong Kong shrugged off the coup.
-- 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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