By James Langton
(September 28 – 13:00 ET) – Markets are up sharply on the strength of a boomerang rally in Nortel Networks today. At midday the TSE 300 is up 205 points to 10,454. Volume is light at 70 million shares, about 3:2 in favour of buyers. The losers outnumber the winners about 5:4, however.
The story of the TSE is all Nortel today. It is up 5.6% in heavy trading of 7.6 million shares. That has the industrials up more than 4%. Most every other sector is up, too, with strong gains in financials and media stocks. Just four groups are down, but only gold is truly weak, down 2%, after a strong showing yesterday.
The Nortel rally comes in the face of downgrades for Nortel from Sanford C. Bernstein, and a downgrade for rival Cisco. However Merrill and Salomon leapt to the defence of both stocks, focusing on the optical side of the business at the expense of the telecom side, a move which is proving supportive.
Joining Nortel on the upside is Research in Motion, Janna Systems and NPS Allelix. But the thes are generally weak outside of the Nortel rally. Rand A Technology is down in active trading, with strong selling in Alcatel, 724 Solutions, C-MAC, Exfo Electro, Ballard Power and QLT.
IMAX continues to fade on speculation that it’s having trouble finding a buyer. Microforum is the chump of the day, falling 25% on an earnings warning. The company insists that revenue remains strong.
Among the financials, Royal is up 0.7% on news of its takeover of Dain Rauscher Wessels in the U.S. The deal sees RBC paying US$1.45 billion in cash for the Minneapolis-based firm, adding 1,200 brokers. Dain Reuscher stock is up 16% to US$92.875, just below the takeover price of US$95.
Most of the other financials are up as well with TD strong, and Manulife trading well. Power Financial, however, is down 3% in active trading.
In business news, Canadian Occidental Petroleum Ltd. is changing its name to Nexen Inc., since Occidental Petroleum Corp. has dumped its 29% share of the firm.
Shaw Communications Inc. says it will issue $450 million worth of debentures and senior notes to help pay down existing debt. Merrill Lynch Canada is leading the $150 million unsecured junior subordinated debenture issue. TD Securities Inc. will handle the $300 million in senior notes.
Markets are rallying nicely in new York today. The Dow is up 179 points to 10,807. The Nasdaq composite has added 82 ticks to 3,738. The S&P 500 is up 25 points to 1,452. Bargain hunting seems the best explanation for the recovery. Nortel and Cisco are driving the upswell, with gains in Lucent, too.
Internet stocks are bouncing today with rallies in AOL, Yahoo! and eBay. Pharmaceuticals are strong, with P&G leading the way.
The CDNX is off just a single point to 3,535 on soft volume of 16 million shares. Oils are up strongly, about 1%, but mines are flat and techs are weak. Inter-Rock Minerals is the top trader, up 150% to 20¢ on 751,000 shares.