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By Gregory Thomas
Special to the Vancouver Sun
Thursday, August 31, 2006
North American markets racked up modest gains Wednesday as U.S. economic reports showed less upward pressure on interest rates, inflation, and oil prices.
Adrian Mastracci, investment counsel at Vancouver’s ‘fee-only’ KCM Wealth Management, says, “It’s never a bad idea to take some profits off the table. Investors would do well to adjust their portfolio to a softer economy.”
The Dow Jones Industrial Average gained 12.97, or 0.1 per cent, to 11,382.91, its highest close in more than three months. The S&P 500 was unchanged at 1,304.27. The Nasdaq added 13.43 or 0.6 per cent, to 2,185.73.
The S&P/TSX Composite index reversed earlier losses to finish the day up 7.88 points or 0.1 per cent, to 12,068.36, recovering from Tuesday's 106.87-point drop, the biggest in a month. And the TSX Venture Exchange finished the day up 4.74, or 0.18 per cent, to 2,680.53.
The main Canadian index was actually 50 points down intraday, as oil prices slumped to new lows after the release of U.S. inventory numbers. The U.S. Energy Department reported that oil supplies climbed 2.48 million barrels last week, 12 per cent higher than the five-year average. October crude dropped as low as $68.65 US after the news, its lowest level in 10 weeks, but recovered to close at $70.03, up 32 cents, on news that Nigerian oil workers are planning a three-day strike starting Sept. 13.
Interest rates moved lower ahead of today's quarterly GDP report, as traders anticipate slower economic growth. The yield on the 10-year Canadian government bond fell 0.04 per cent to 4.121 per cent, its lowest level since March.
Telecommunications stocks, with their high-dividend yields, were the best performing group on the TSX. Telus gained $1.13 to $54.89, a new all-time high. BCE Inc., parent of Bell Canada, moved up 25 cents to $27.85.
Spot gold added $4.33 to $619.28 US, reflecting U.S. dollar weakness. The Canadian dollar finished the day down 0.12 cents to 90.16 US cents. While some traders saw Wednesday's three-month high on the Dow as a green light for further gains ahead, others saw a flashing caution sign.
"It's an opportune time for investors to get their house in order," said Adrian Mastracci, fee-only investment counsel with Vancouver-based KCM Wealth Management. "Equity prices are up. It's never a bad idea to take some profits off the table. Investors would do well to adjust their portfolio to a softer economy.
"The U.S. GDP data points to a softer economy -- $70 oil is beginning to take its toll. Risk management is a priority now."
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