The Toronto stock market was trading flat Friday morning as investors had a muted reaction to a move by the U.S. Federal Reserve decision to bump up the ''discount'' lending rate charged to banks by one-quarter point to 0.75%.
The S&P/TSX composite index was up 1.71 points, to 11,696.55.
The discount rate is used for emergency loans to banks. And even though the Fed said the step should not be seen as a signal that it will soon boost interest rates for consumers and businesses, investors worry that the days of interest rates near zero are coming to an end.
The U.S. dollar shot higher following the Fed announcement, sending the Canadian dollar down 0.79 of a cent to 95.23 cents US.
In corporate news -- a second bidder has emerged for the broadcasting assets of struggling media giant Canwest Global Communications (TSX.V:CGS). Catalyst Capital Group said it is leading a bid alongside Canwest’s founding family, the Aspers. The announcement comes on the day that Shaw Communications (TSX:SJR.B) was headed to a Toronto courtroom to seek approval for an offer to buy 20 per cent of Canwest for an undisclosed sum, which some analysts estimate is worth least $65 million. Catalyst’s offer is valued at nearly $120-million.
Shaw shares added 6 cents to $20 while Canwest shares ran up 2 cents to 16.5 cents on the Venture Exchange.
The Canpotex marketing agency that represents three of Saskatchewan’s major potash producers has reached a contract to sell about US$222 million worth of the fertilizer ingredient to a consortium of buyers in India.
Canpotex is the international marketing organization owned by Potash Corporation of Saskatchewan (TSX:POT), Calgary-based Agrium Inc. (TSX:AGU) and a Canadian subsidiary of Mosaic Co. (NYSE:MOS). Potash shares gained $1 to $120.90 and Agrium added 11 cents to $68.93.
In other news -- Brookfield Asset Management Inc. (TSX:BAM.A) shares gained 36 cents to $24.30 after it reported it had a smaller profit in the fourth quarter and year ended Dec. 31. Net income fell to US$102 million or 15 cents per diluted share in the fourth quarter, down from US$171 million or 27 cents per share a year earlier. Annual income fell to US$454 million or 71 cents per share in 2009, down from US$649 million or $1.02 per share in 2008.
Birchcliff Energy Ltd. (TSX:BIR) is increasing its capital budget to $182 million in 2010, up 78 per cent from last year. The company also said its unaudited 2009 financial results include a net loss of $24.2-million or 20 cents per diluted share. Birchcliff shares gained 48 cents to $9.98.
On the economic front -- Canada says the value of retail sales rose 0.4% to $35.3 billion in December, offsetting the previous month’s decline. In volume terms, sales advanced even more at 0.6%. The December results are expected to add to the already positive expectations for fourth-quarter economic growth. The agency said five of eight retail sectors gained in December.
Down south -- the Labor Department said the seasonally-adjusted consumer price index rose 0.2% last month on the back of higher energy prices. Economists surveyed had expected an increase of 0.3%. Meanwhile, core inflation, which strips out volatile energy and food items, fell for the first time since 1982.
ON BAYSTREET
Seven of the 14 TSX subgroups were positive -- Real-estate gained the most, up 0.75%, while helath-care gained 0.54% and tech hurtled up 0.32%.
On the downside -- minig stocks fell 0.96% gold issues were tailing off 0.95% and base metals were down 0.79%.
The TSX Venture Exchange slid 7.79 points to 1,515.89, while the Nasdaq Canada index shed 3.97 points to 754.89.
ON WALLSTREET
The U.S. stock market opened lower on Friday, as investors retreated after the U.S. Federal Reserve unexpectedly raised the discount rate after Thursday's close, but the drop was softened by a smaller-than-expected rise in consumer prices.
The Dow Jones Industrial Average was down 16 points, or 0.2%, to 10377 in early trading. The Nasdaq Composite was down 0.4% and The Standard & Poor's 500-share index fell 0.4%.
In corporate news -- J.C. Penney climbed after its fiscal fourth-quarter earnings fell 5.2% but rose when excluding pension costs. The department-store operator also gave an optimistic outlook.
Dell slid early after reporting a dip in quarterly profit late Thursday but a gain in sales, with revenue for mobility and service units gaining on an annual basis. Gross margins fell short of some analysts' expectations.
Treasurys climbed, with the 10-year note up 3/16 to yield 3.786%.
In commodities markets -- crude oil for March delivery was trading 7 cents higher at $79.13 a barrel and the most actively traded April gold contract shed $2.80 to trade at $1,115.90 an ounce.
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