money
DOLLAR BRITISH£
UP 0.90¢
1.0324¢ US
CURRENCIES
Day over day statistic
Tuesday Monday
US DOLLAR $0.9686 $0.9771
YEN $0.01188 $0.01207
STUDS
Biggest % gains in stocks over $5
1 CONTINENTAL
$8.40
GOLD LIMITED
+8.39
2 ALLIANCE GRAIN TRADERS
$24.93 +8.16
3 ALEXCO RESOURCE
$ 8.40 +7.69
DUDS
Biggest % losses in stocks over $5
1 STELLA-JONES
$34.50
INC.
–6.50
2 SEMAFO INC.
$8.47 –5.47
3 RESEARCH
$41.35
IN MOTION
–4.37
GO FIGURE
Today’s big financial numbers
3.6%
The drop in U.S. house
prices in March, as
measured by the S&P/Case-
Shiller Index. The measure
has now fallen below its
worst 2009 level, pointing
to a double-dip in the U.S.
housing market.
59%
The proportion of retired
Canadians are largely
living the retirement of
their dreams, according to
a TD Waterhouse survey.
Still, 37% of retirees are
concerned they don’t have
enough money to do what
they want.
ECONOMY: Bank of Canada says underlying inflation is ‘relatively subdued’
Central bank
holds rates,
hawkish tone
surprises
LOUISE EGAN
and RANDALL PALMER
Reuters
OTTAWA — The Bank of
Canada warned Tuesday that
it would eventually have to lift
borrowing costs if the economy
continues expanding, introduc-
ing some hawkish language that
caught many in the market off
guard.
The statement by the central
bank — which kept its key inter-
est rate unchanged at 1% — drove
the Canadian dollar and short-
term bond yields higher as trad-
ers increased bets on rate hikes
later this year.
“To the extent that the expan-
sion continues and the current
material excess supply in the
economy is gradually absorbed,
some of the considerable mon-
etary policy stimulus currently
in place will be eventually with-
drawn, consistent with achiev-
ing the 2% inflation target. Such
reduction would need to be
carefully considered,” the central
bank said in a statement.
The markets interpreted “even-
tually” to mean not the next
rate decision in July but rather
September or — even more likely
— October or December.
Previous statements had only
said that any future hikes “would
WIRELESS: Company losing ground to iPhone and Android
Nokia drops targets, shares slump to 13-year low Steve Jobs to open Apple event, unveils iCloud
HELSINKI — Mobile phone
maker Nokia Oyj abandoned
hope of meeting key targets just
weeks after setting them, raising
questions over whether its new
boss can deliver on the turn-
around he promised in February.
EURO S&P/TSX NASDAQ
DOWN $1.61 DOWN 0.17¢
$1.5933 CDN $1.3939 CDN
SUMMIT: Telecom industry needs strategy to deal with market newcomers, says rookie industry minister
Foreign ownership is key
Stefania Moretti
Foreign ownership in the
Canadian telecom market is an
important piece of the puzzle
when it comes the country’s
digital strategy, said new fed-
eral Industry Minister Christian
Paradis in his first formal speak-
ing engagement since being given
the job.
“I’m committed to getting it
right,” he said at the at the 2011
Canadian Telecom Summit in
Toronto.
Paradis also told reporters
there’s a delicate balance to strike
when it comes to setting aside
wireless spectrum at auction,
competition and the needs of
consumers.
Ottawa is expected to
announce the rules surrounding
the next block of available wire-
less spectrum for auction later
this summer and has been flirting
with the idea of blocking out the
incumbents in order to promote
increased competition in the
wireless industry.
In a statement Tuesday,
executives with Rogers
Communications Inc. urged
Paradis to make 700 MHz avail-
able to everyone as quickly
as possible, saying that much
is crucial to the deployment of
next-generation LTE technology,
I’m committed to
getting it right.”
Industry Minister Christian Paradis
6%
OVERNIGHT RATE
May 17,2000–Jan.23,2001
5%
5.75%
July 10,2007
4%
3%
2%
1%
0%
2002 2004
Source: Bank of Canada
need to be carefully considered.”
“It doesn’t sound like the cen-
tral bank is gearing up for a rate
hike in July but the warning that
rate hikes will eventually come
suggests that we’ll see a few
hikes before the end of the year,”
said CIBC chief economist Avery
Shenfeld.
“Markets had priced out nearly
all of the risks of a hike not only
in July but September as well. I
think the bank was uncomfort-
able with the market starting to
assume that it was going to wait
forever to begin hiking.”
Overnight index swaps, which
trade based on expectations for
the key central bank policy rate,
showed investors see less than a
5% chance of a rate hike in July.
But swaps traders did increase
the probability that the central
bank will tighten at some point
after July. The central bank has
scheduled policy announce-
ments in September, October
and December.
The central bank became
Its shares tumbled 18% to their
lowest in 13 years, wiping some
$5.5 billion US off its market
value as investors worried the
company, once the leading force
in its industry, was losing so
much market share it may never
DOW
DOWN 26.78 UP 38.44
13,802.90 2,835.30
Federal Industry Minister Christian Paradis talks to media at the Canadian Telecom Summit on Tuesday.
which is quickly becoming the
4G standard for global handset
makers.
Blocking out the established
players from the sale would be
“misguided,” said Rob Bruce,
president of communications for
Rogers.
“Restrictions on the 700-MHz
Sept.8,2010
1.00%
4.50%
June 1,2010
0.50%
Apr.21,2009
0.25%
2006 2008 2010
QMI AGENCY
the first in the Group of Seven
advanced economies to tighten
monetar y polic y following
the global financial crisis,
hiking three times from June-
September last year but paus-
ing since then due to the weak
global recovery.
The bank now sees underlying
inflation as only “relatively sub-
dued” rather than “subdued” as
in previous statements, but it did
not change its overall outlook for
inflation.
“It’s a subtle change. And I
think that’s the theme here. They
certainly didn’t bang us over the
head with any obvious changes,
but there were a few very subtle
shifts in the language,” said BMO
Capital Markets deputy chief
economist Doug Porter.
“I do think they are eventually
preparing the ground for rate
hikes, but there’s very little here
to suggest that the bank has had
a big change of heart. It’s likely
to be some time yet before they
start raising rates.”
regain its footing.
Nokia has been losing ground
in the smartphone market to
Apple Inc’s iPhone and Google
Inc.’s Android devices.
— Reuters
NIKKEI GOLD OIL
UP 128.21 UP 188.76 DOWN $0.40
12,569.80 9,693.73 $1,535.90 US
STEFANIA MORETTI QMI Agency
band auction would be unfair to
our 9 million wireless customers
who have every right to access
a truly national, robust LTE net-
work in both urban and rural
markets,” Bruce said.
Former federal industry min-
ister Tony Clement often made
his concerns regarding foreign
INSURANCE: Deal will expand, diversify business
Intact to acquire AXA’s
Canadian arm for $2.6B
May 31,
2011
1.00% TORONTO — Intact Financial
Corp. has agreed to buy the
Canadian arm of AXA Group for
$2.6 billion in cash in a move
that will boost its premiums by
more than 40% and diversify its
product mix.
The deal to acquire AXA
Canada, the 6th largest home,
auto and business insurance
company in the country, will
increase its direct premiums in
Canada by $2 billion to more
than $6.5 billion.
The acquisition will enable
Intact, already Canada’s largest
provider of property and casu-
alty insurance, to expand its
commercial business, particu-
larly in the midmarket segment,
and strengthen its presence in
Atlantic Canada as well as in the
provinces of Quebec and British
Columbia.
“The acquisition creates new
opportunities for IFC as it will
strengthen our offerings, nota-
bly in business insurance,”
Intact chief executive Charles
Brindamour said in a release on
Tuesday announcing the deal
with Paris-based AXA.
Intact, the former Canadian
insurance arm of ING, the Dutch
financial group, operates under
the Grey Power and Belair
Direct banners. As long ago as
November it said it was on the
hunt for acquisitions to build
on its leading position in the
Canadian insurance market.
TECHNOLOGY: Shares rise almost 2% after announcement
Chief executive Steve Jobs,
who spent months on medical
leave, will open an annual devel-
opers’ conference next week
showcasing the iPad maker’s
latest computer software and a
new cloud computing service.
AECO PRIME
UP $2.11 UP $0.06
$102.70 US $3.92
ownership and spectrum public
via Twitter with daily updates.
“I might Tweet,” Paradis said,
adding he learned more about the
microblogging service in the fed-
eral election campaign and that
he “appreciates” its usefulness.
stefania.moretti@canoe.ca
AXA has ballooned in 30 years
from a small mutual insurer in
Normandy to become Europe’s
second-biggest insurer. Its
current chief executive, Henri
de Castries, is facing growing
questions about the compa-
ny’s push into emerging mar-
kets and anemic share price
performance.
AXA recently completed the
sale of its Australasian opera-
tions to Australian wealth man-
ager AMP for $3.53 billion US.
The deal will allow AXA to take
full control of its other Asian
assets and increase its exposure
to growth in markets with the
potential for rapid growth.
The transaction, announced
on Tuesday, is expected to close
later this year after receiving
“The acquisition creates new opportunities for IFC,” said Intact chief
executive Charles Brindamour on Tuesday, referencing a deal with AXA.
Apple’s shares rose almost 2%
after it said Tuesday that Jobs,
along with a team of executives,
will deliver the keynote speech
at the June 6 conference. It was
unclear if the CEO is returning
from medical leave, however.
UNCHANGED
3%
businessbriefs
DATA CLOUDS PROSPECTS
OF ECONOMIC RECOVERY
NEW YORK — Data showing a
double-dip in home prices, pes-
simistic consumers and a slow-
down in regional manufacturing
raised concerns Tuesday that the
U.S. economy’s soft patch could
become protracted.
“The question is, ‘Is the softer
data we’re seeing transitory, or is
it likely to persist throughout the
remainder of 2011?’ Right now,
that’s an open question that inves-
tors are trying to figure out,” said
Michael Sheldon, chief market
strategist at RDM Financial in
Westport, Conn.
The U.S. economy grew at a
tepid 1.8% annual rate in the first
three months of the year, and
these fresh signs suggest the
recovery is still struggling to gain
momentum.
A drop in a barometer of busi-
ness activity in the U.S. Midwest
added to other regional reports
that have pointed to slower
growth in manufacturing this
month amid supply chain disrup-
tions from the major earthquake
in Japan in March.
SCOTIABANK PROFIT
LIFTED BY LOAN GROWTH
TORONTO — Bank of Nova
Scotia’s profit rose sharply and
topped expectations as Canada’s
No. 3 bank increased lending in
its second quarter and cut back
on provisions for older loans that
soured.
The results, which sent Scotia’s
shares higher on Tuesday, largely
mirrored trends reported by its
rivals last week. Domestic lending
grew again in the three months
ended Apr. 30 but the rate slowed
and margins came under pres-
sure as competition among banks
intensified.
— Reuters
required regulatory approvals.
Toronto-based Intact plans to
fund the deal using $500 million
of cash on hand, an $840 million
equity issue and credit facilities
worth $1.3 billion.
Intact said the combined
entity will generate significant
cash flow, and it expects its debt-
to-total-capital ratio to reach
an optimal level of 20% within
24 months of the closing of the
acquisition.
The deal is expected to gener-
ate an internal rate of return of
20% and boost annual operating
earnings per share by 15% in the
mid-term. It is also expected to
result in annual savings of over
$100 million.
— Reuters
Reuters files
An appearance by Jobs, a sur-
vivor of a rare form of pancreatic
cancer, would mark one of the
few occasions he has showed up
in public since January.
— Reuters