Mar. 9, 2009 (Baystreet.ca) --
12:00 pm EST
Initial enthusiasm cooled for equity markets Monday, as investors digested hopeful news from the auto sector, and a prospective merger between drugmakers Merck and Schering-Plough.
The Toronto stock market started off the week up with oil prices improving to the $45 U.S. a barrel level as investors anticipated another OPEC production cut will shrink global supplies.
Toronto's S&P/TSX composite index was off its highs for the day, but was still up 39.15 in the minutes before noon to 7,630.62
GM of Canada Ltd. and the Canadian Auto Workers announced yesterday they had negotiated significant concessions affecting employees and retirees that will freeze their wages and pensions, increase personal expenses for health care benefits, reduce employee holidays and eliminate annual bonuses.
The cuts, which could mean hundreds of millions of dollars in additional savings for GM until the fall of 2012, are critical for the company's survival plan and to qualify for loans from the federal and provincial governments. It could help in making GM eligible for $6 billion in government aid.
On the TSX, CIBC declined 46 cents to $37.04 while Manulife Financial shares fell 21 cents to $9.44.
The TSX energy sector rose as EnCana Corp. gained $1.39 to $49.90 and Suncor Inc. ran up $2.11 to $29.46.
Drilling and well-servicing equipment maker Wenzel Downhole Tools Ltd. reported 2008 profits of $12.4 million, up from 2007 net earnings of $2.8 million. The Calgary-based company reported full-year revenue of $71.8 million compared to $54.2 million the year before and its shares surged 10 cents to 71 cents.
The base metals sector moved up with Teck Cominco Ltd. up 15 cents to $4.05 and Ivanhoe Mines gained 29 cents to $5.56.
The gold sector was down as Barrick Gold Corp. declined 89 cents to $36.07.
Shares in fertilizer producer Agrium Inc. gained $1.02 to $41.30 after CF Industries rejected the Canadian company's unsolicited bid worth $3.6 billion U.S. in cash and stock, calling the offer "grossly inadequate" and vowing to pursue a business combination with U.S. rival Terra Industries Inc.
Rio Tinto Group, the world's third largest mining company, isn't planning to slow development of the $3-billion U.S. Oyu Tolgoi copper-gold deposit in Mongolia, denying a report in the Sydney Morning Herald.
London-based Rio Tinto and Ivanhoe Mines Ltd., jointly developing Oyu Tolgoi, may proceed at a slower pace than planned, the newspaper reported today, citing Albanese. Rio Tinto and Ivanhoe have spent more than $1 billion U.S. on the project to date, Albanese said today.
Canadian housing starts fell 12% in February, more than economists predicted, because of fewer starts on multiple-family dwellings.
The total of 134,600 units on an annualized basis compares with 153,500 in January, Canada Mortgage and Housing Corp. said today from Ottawa. Economists anticipated the pace of starts would slow to 145,000 units, according the median of 19 responses in a Bloomberg survey.
The Canadian dollar lost three-quarters of a cent in the morning, to 77.03 cents U.S., off lows dating back to September 2004.
BAYSTREET
Of the 13 TSX sub-groups, nine were downward by the noon break. Financials were off 1.5%, gold down 1.2% and utilities, down 1%
The four gainers were led by energy stocks, ahead 3.7%, metals and mining, up 0.9% and health-care stocks, progressing 0.1%.
The TSX Venture Exchange was down 3.17 points to 825.95, while the Nasdaq Canada index was up a shade, 0.4 points to 374.94
ON WALLSTREET
The Dow Jones industrial average tailed off a mite as the clock approached noon, by two points to 6,625.11
The S&P 500 index gained 1.82 points to 685.20 while the Nasdaq composite index slid 2.22 to 1,291.63
Merck & Co. has offered Schering-Plough shareholders $10.50 U.S. in cash and just over half of one Merck share for each of their shares. The price represents a 34% premium to Schering-Plough's closing stock price on Friday.
Merck stock was down about 10% in early trading, while Schering shares rallied 12%.
Newspaper publisher McClatchy said it would cut 1,600 jobs, or 15% of its workforce, because of a decline in advertising revenue. McClatchy owns The Miami Herald, Sacramento Bee and Anchorage Daily News, and has been making heavy debt payments since it bought Knight Ridder Inc. in 2006.
In the U.S., Capital One Financial Corp. said Monday it is cutting its dividend 87% to five cents in an effort to preserve capital amid the ongoing economic downturn.
Heavyweight lender HSBC, Europe's largest bank, plunged over 24% in Hong Kong trade ahead of its offering of new shares to raise capital. In New York, HSBC Holdings fell $1.27 to $24.23 U.S.
Elsewhere, McDonald's was also in focus as the fast-food chain warned that the stronger dollar and commodity costs will likely squeeze its first-quarter revenue results and margins.
The fast-food chain anticipates quarterly sales to be off by at least $600 million U.S. and earnings to be hurt by seven cents to nine cents per share if foreign-currency rates stay at current levels. Its shares moved ahead $1.22 to $53.34 U.S.
Treasury prices fell, raising the yield on the benchmark 10-year note to 2.92% from 2.87% Friday. Treasury prices and yields move in opposite directions.
The April crude contract on the New York Mercantile Exchange rose $2.53 to $48.05 U.S. a barrel.
The April bullion contract on the Nymex eased $14.80 to $927.90 U.S. an ounce.