Market Update, Friday, November 22, 2013

By Musabbir Mazhar

The S&P/TSX composite index was up slightly to end the week at 13,478.34 (+0.02%). The S&P Industrials sector was up 0.49% while the Materials sector was down -0.592 %.
CCL Industries Inc. announced that it will shut down its aerosol manufacturing plant in Ontario by mid 2015 – this will cut down 170 jobs. The plant has not been profitable since 2009. However the company plans to expand in Toronto, Montreal, US and Mexico, as the overall company profit rose to $84.1 million for the 9 month ended from last year of $77.6 million. CCL.B (TSX) closed up to $81.58, 23 cents higher.
The DJIA rose 54.78 points to close at 16,064,77 as jobless claims declined to levels that were seen before the Great Recession. The S&P 500 climbed to record high levels as well as it ended at 1804.76 (+0.50%).
Gold was at 4 month low as data released from Fed earlier on Wednesday indicated that labour markets are expected to improve enough to start slowing down bond purchases. The dollar strengthened on the news. The metal has lost more than 26% in value this year – the largest decline in a decade – as people lost faith in gold as a store of value. This is understandable as Fed indicates they are going to slow down QE, and inflation fears have reduced. Gold was at 1,232.36 USD/t oz. (-0.92%) at the spot rate. John Paulson, the billionaire hedge fund manager and the biggest holder in SPDR Gold Trust, which is the largest Exchange Traded Product, said he would not put in more of his own money in his gold fund now. Gold rallied 70% since December 2008 for two and a half years as Fed injected stimulus into the economy.
Whitecap Resources Inc. (TSX:WCP), announced the takeover of a private energy company, Home Quarter Resources, in Kindersley, west central Saskatchewan. Whitecap is an oil and gas development and production company which owns oil-generating assets in western Canada. Whitecap will be acquiring the target’s all issued and outstanding shares by a total of 27,535,867 Whitecap common shares. WCP will also take in the approx. $3.0 million of the target’s working capital surplus. The total consideration for the deal came at $327.4 million including the WC surplus. WCP’s stock price for the deal was accepted by both parties at $12.00. There was definite strategic rationale for the deal for WCP as they would increase their oil production from the target’s assets in western Canada as well as it would boost their Free Cash Flow. WCP increased its dividend by 8% after the deal was announced, now at 68 cents per share annually. The company’s shares were boosted by 5% after the deal – closing stock price was $12.79.

5 day price chart