By James Langton
(August 22 – 13:00 ET) – This morning the TSE experienced another of those technical glitches that has made it famous. The exchange detected a problem in its opening process, and shut things down, delaying the opening until 10:25 ET.
An unusually heavy news slate, with three TSE 35 blue chips reporting earnings and a major M&A deal announced this morning, made the outage all the more frustrating to traders. Nevertheless, once trading opened buyers hit the ground running. At midday the TSE 300 is up 61 points to 11,134. Volume is heavy at 72.5 million shares, about 2:1 in favour of buyers. Advancers are edging ahead of decliners, too.
Industrials and mines are leading the buyers, followed by software stocks and insurers. Utilities, pipelines and biotechs are driving the sellers.
Mines are hot today thanks to a $1.5 billion hostile takeover bid by Noranda Inc. for rival Rio Algom Ltd. Noranda made a $24.50 a share all cash offer for 100% of Rio Algom this morning, a 35% premium. Noranda proposes to sell half of Rio Algom’s assets to a Chilean firm after the deal. Rio Algom has called the bid hostile, and said it is not permitted under the company’s shareholders rights plan. However the firm’s stock is up 44% to $26 on volume of 10.6 million shares. Investors are obviously betting on a white knight riding in to top the Noranda bid.
Apart from the mines, technology is the other strong sector, led by Nortel Networks. The friendly giant is up almost 2% in relatively light trading. Joining it on the upside are JDS Uniphase, Sierra Wireless, Tundra Semi and CGI Group. Rogers is strong, too.
Heritage Concepts has been knocked out of the top spot on the volume board, but it is still active, up 23% on 6.5 million shares. Also in the news, Royal Bank reported improved third-quarter profits of $1.75 a share, up from $1.33 a share in the period last year, and well ahead of analyst forecasts of $1.64.
Bank of Montreal came in on target with profit of $1.40 per share, up slightly from $1.37 in the quarter last year, and inline with calls for $1.39 from analysts.
TD is the strongest trader among the banks this morning, up slightly. BMO though has dropped 2.3% on its soft results.
Bombardier is down about 1% in heavy trading after it reported second quarter earnings. Net income for the period ended July 31 was 16¢ a share, up from 12¢ last year, and in line with expectations.
The other big losers of the day are techs which are out of favour today. Biotechs, QLT, NPS Allelix and Biovail are down, as are Alcatel and Mosaid. Telus has dropped almost 4% as investors digest its takeover bid for Clearnet. Seagram is also weak.
In New York, volume is rather light with traders focused on this afternoon’s interest rate announcement. The Dow is up 74 points to 11,153. The Nasdaq composite has gained 32 points to 3,985, and the S&P 500 is up four to 1,504.
Financials are leading the way higher in anticipation that rates won’t move. J.P. Morgan in particular is hitting an all-time high. Ameritrade is up sharply on takeover rumours surrounding the online broker, and this is pushing all the online brokers higher.
The CDNX makes the bullish case unanimous. It is up 14 points to 3,356. Volume is weak at 13 million shares. Linmor Technologies is the hot stock, up 32¢ to $1.17 on 2.3 million shares.