Canadian Issues Return Initial Gains

Canadian Issues Return Initial Gains Monday, January 24, 2005, 4:15 PM EST (Thomson Financial Corporate Group): Bay Street moved lower on the session, as earlier strength from resources turned mixed later in the day. Gold and material stocks turned lower, while the energy sector remained upbeat on higher oil prices. In corporate reports, a warning from the chip group and pressure from Research In Motion weighed on the tech sector. South of the border, American Express' fourth-quarter earnings topped analyst expectations. Meanwhile, the Bank of Canada delivers its decision on interest rates tomorrow, which are widely expected to remain unchanged. * The S&P/Toronto Stock Exchange Composite Index slipped 8.63 points, or 0.09%. * Gold prices turned lower, after jumping higher in early trading and despite strength in the yellow metal on greenback weakness. In corporate news, Wheaton River Minerals said that Goldcorp extended its bid for the company until February 14. * Separately, oil prices rose, boosted by snowstorms across the Northeast U.S. Also, continued violence in Iraq ahead of elections scheduled for this Sunday and potential disruptions to Nigeria's oil output added oils upward momentum. In research, CIBC downgraded Canadian Natural Resource to "sector perform" from "outperform." Separately, TVI Pacific was active, after the firm announced that its operating subsidiary in China, Hunan Pacific Geological Exploration, was recently granted the first qualified explorer license in China. * Within the technology group, Nortel Networks and LG Electronics signed a memorandum of understanding to establish a joint venture in which they would provide telecoms and networking equipment for Korea and other markets. * Elsewhere, Research In Motion plunged on the session. A rival of the firm, Good Technology, is widening its scope for its wireless software platform, which will now deliver enterprise software applications to customers. Also, in this week's Barron's roundtable, RIM was included on a list of stocks to sell short. * Outside of Canada, Infineon Technologies warned that second-quarter profit and revenue would decline sequentially due to seasonal effects, pricing pressure and a continued slowdown in demand. The company said it expects a further slowdown in worldwide semiconductor market demand during the second quarter. The firm also posted a leap in its first- quarter net profit due largely to one-off license income. In domestic chip research, BMO upgraded Mosaid Technologies to "outperform" from "market perform," sending that stock higher. Separately, Zarlink slumped, after Harris cut the firm's price target to US$2.60 from US$3.00. * Elsewhere, Royal Group Technologies warned of a fourth-quarter loss of C$0.39 to C$0.45 a share, compared with a year-ago profit of C$0.04 a share, or C$0.18 a share after a tax adjustment. The firm's warning stems from the weaker U.S. dollar, higher raw-material costs and a legal settlement related to intellectual property, amongst other pressures. Royal Group's chief executive officer commented that the firm is taking immediate steps to improve future results, including implementing price increases. * NovAtel rallied, after the firm lifted its 2004 earnings and revenue forecasts. NovAtel now expects earnings of C$9.2 million to C$9.7 million and revenue of C$53.5 million to C$54 million. Also, 2005 revenue is expected to outpace that of 2004. * Telecom stocks declined on the session. CIBC World Markets commented that cable-operator Videotron is pricing its new residential telephony services at a substantial discount to a similar package offered by BCE's Bell Canada. * In cyclical reports, the Competition Tribunal ruled that Sears Canada violated the Competition Act in a tire sales advertisement. Sears Canada landed in the red. * On the economic front, retail sales slipped 0.1% to a seasonally adjusted C$29.53 billion in November from a revised C$29.55 billion in October. Economists expected sales to edge up 0.1% in November. The reading marks the first decline in seven months. Excluding autos, retail sales were flat at C$22.39 billion. -- Linda.Shea@thomson.com; Thomson Financial Corporate Group This is Thomson Financial Corporate Group's 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 fingertips, please visit http://www.irchannel.com/. If you have any questions please e-mail James Sang at james.sang@tfn.com or call 646.822.6233 For more information about Thomson Financial visit us on-line at http://www.thomsonfinancial.com/. PRNewswire -- Jan. 24 Source: Thomson Financial Corporate Group Web site: http://www.thomsonfinancial.com/ http://www.irchannel.com/ ------- Profile: International Entertainment