The Toronto stock market was set to find some lift from the resource sector Tuesday as oil prices rose in the wake of an agreement to lend Greece €130 billion to avoid a debt default while traders took in major acquisition activity.
Calgary-based oil and gas contractor Flint Energy Services Ltd. said Monday it is being bought by U.S. engineering and construction giant URS Corp. for $1.25 billion in cash. The deal, worth $25 a share, reflects booming growth in Alberta’s oilsands and North American shale gas. The price represents a 68% premium to Flint’s closing price Friday on the TSX.
And on Tuesday, Newfoundland-based power company Fortis Inc. (TSX:FTS) said it is buying New York state utility CH Energy Group Inc. in a cash and debt deal worth US$1.5 billion.
The Canadian dollar was down 0.31 of a cent to 100.46 cents US after Greece on Monday finally secured its second massive bailout in less than two years.
Traders preferred the safe haven status of U.S. Treasuries on the realization that there are many hurdles still to be cleared and Greece is still lumbered with massive amounts of debt even after its private creditors agreed to a huge writedown of debt. The prevailing view in the markets is that Greece remains insolvent and that its debt crisis still has a few more chapters to run.
“Unfortunately, despite this agreement that was a long time coming, it doesn’t feel like everything is onward and upward,” said BMO Capital Markets senior economist Jennifer Lee.
U.S. futures were mainly higher as equity markets react cautiously to the Greek deal with the Dow Jones industrial futures up 27 points to 12,956, the Nasdaq futures were down 1.25 points to 2,580.75 and the S&P 500 futures rose 1.3 points to 1,361.
Prices for oil and metals advanced as the March crude contract on the New York Mercantile Exchange gained $1.41 to US$104.65 a barrel.
Crude prices also rose as Iran laid out conditions for future oil exports to European countries after halting sales to Britain and France earlier this week in retaliation for an EU embargo over Tehran’s controversial nuclear program that is to go into effect in July. Foreign Ministry spokesman Ramin Mehmanparast said Tuesday that Iran seeks guarantees of payments, long term contracts and a ban on unilateral cancellation of contracts by buyers.
Tehran said Monday it was considering extending the oil embargo to other European countries.
Metal prices also climbed with the March copper contract up eight cents to US$3.78 a pound while April bullion was ahead $13.90 to US$1,739.80 an ounce.
The feeling that the Greek deal merely buys time pushed European bourses lower.
London’s FTSE 100 index lost 0.42%, Frankfurt’s DAX fell 0.76% and the Paris CAC 40 was down 0.73%.
Earlier, Japan’s Nikkei 225 index closed down 0.2% while Hong Kong’s Hang Seng rose 0.3%.
Traders also took in major earnings news from the U.S.
Wal-Mart Stores Inc. reported a 4.2% decline in fourth-quarter profits to US$5.16 billion or $1.50 a share. Net sales rose 5.9% to $122.28 billion.
Home Depot Inc.’s fiscal fourth-quarter net income rose 32% to US$774 million or 50 cents a share. Quarterly revenue increased six per cent to $16.01 billion.
In other corporate news, Research In Motion (TSX:RIM) has released new operating software BlackBerry PlayBook OS 2.0 for download. The Waterloo, Ont.,-based company says the new operating system enhances communications and productivity and offers expanded application and content support.
Natural gas engine technology maker Westport Innovations Inc. (TSX:WPT) has changed a joint venture with Cummins Inc. to refocus on what could be strong growth in the North American market. The Vancouver company said Monday the Cummins Westport venture will narrow its focus on developing new fuel-efficient engines for North American customers.