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Canada Stocks Have Biggest Weekly Drop in a Year on GDP Concerns

Canadian stocks fell, completing their worst weekly decline in a year, as commodity producers and financial companies slid after Canada and the U.S. reported economic growth figures that trailed economists’ forecasts.

Royal Bank of Canada (RY), the country’s largest lender, dropped 1.3 percent after Canada reported the biggest monthly decline in gross domestic product in two years. Suncor Energy Inc. (SU), Canada’s largest oil and gas producer, slipped 1.3 percent as crude slumped 1.8 percent to $95.70 a barrel. Barrick Gold Corp. and Goldcorp Inc. (G), the biggest producers of the precious metal, declined after analysts cut their price estimates.

The Standard & Poor’s/TSX Composite Index decreased 102.15 points, or 0.8 percent, to 12,945.63 at 4:00 p.m. in Toronto, extending its weekly retreat to 4.1 percent, the most since July 2, 2010.

“The macro scene dominates today,” Marcus Xu, Vancouver- based director of equity investments at Genus Capital Management, said in a telephone interview. Genus oversees C$1.7 billion. “For the overall general economy to recover, you need the price of oil” to fall to the $80-a-barrel range and “stay low,” he said.

The index fell 3.3 percent over the past four days as U.S. lawmakers failed to reach a deal to raise the country’s debt ceiling and that country reported a decline in durable-goods orders. Seventy-five percent of Canadian exports went to the U.S. last year, according to Statistics Canada.

Slower Growth

U.S. gross domestic product rose at a 1.3 percent annual rate in the second quarter after a 0.4 percent gain in the prior quarter that was less than earlier estimated, Commerce Department figures showed today. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase.

Canada’s gross domestic product fell 0.3 percent, missing every economist forecast, as production in the mining and oil and gas sector declined, government data showed. Output fell 0.3 percent in May to C$1.26 trillion ($1.32 trillion). The median growth estimate in a Bloomberg survey was 0.1 percent.

A gauge of financial companies in the S&P/TSX fell to the lowest level since December 2010.

National Bank of Canada, country’s sixth-largest bank, declined 2.3 percent to C$74.05. Royal Bank of Canada dropped 1.3 percent to C$51.40. Bank of Nova Scotia (BNS), Canada’s third- biggest lender by assets, decreased 1.3 percent to C$54.18.

Energy Shares

Crude oil futures fell for their first weekly drop since June, on concern that the failure to reach a debt deal in the U.S. threatens the economy of the biggest crude consumer. The index of energy companies in the S&P/TSX slipped 0.7 percent.

Suncor Energy slipped 1.3 percent to C$36.62. Capital Power Corp. (CPX), an electricity generator, fell 1.9 percent to C$24.45, the lowest price since Feb. 8. Trilogy Energy Corp. (TET), a western Canadian oil and gas producer, dropped 2.4 percent to C$27.20.

Goldcorp, fell 1.7 percent to C$45.69 as its price estimate was cut by HSBC Securities USA Inc., Scotia Capital Inc., UBS AG and Cormark Securities Inc. following a reduction in its production forecast. It dropped 11 percent this week, its biggest loss since January 2009. Gold gained 0.7 percent after dropping for two days.

“Investors continue to flock to the safety of the gold bullion in a risk-off play, and not to the gold stocks because of their equity market exposure,” said Kenneth Mack, an analyst and trader at Stone Asset Management in Toronto in an e-mail. Stone Asset Management oversees about C$850 million.

Barrick slid 0.7 percent to C$45.55, after the 12-month price estimate on its U.S. shares was trimmed to $60 from $64 at UBS AG, which cited an increase in capital spending estimates. The shares were cut to “market perform” from “buy” by an analyst at Cormark.

Energy-Sensitive

“The mining sector is getting bigger and bigger in Canada and it is getting to be more important,” Genus’s Xu said. “High energy prices will impact them as well.”

Dundee Precious Metals Inc. (DPM), a gold producer with mines in Bulgaria and Armenia, lost 3.2 percent to C$8.29. Silver Wheaton Corp. (SLW), Canada’s fourth-largest precious-metals company by market value, fell 2.4 percent to C$34.41.

Gildan Activewear Inc. (GIL), the country’s biggest clothing maker, tumbled 7.3 percent to C$28.64, the most in the S&P/TSX. Susan Anderson, an analyst at Citigroup Inc., cut the stock to “sell” from “hold,” saying the company will have to cut prices to drive sales.

Potash Corporation of Saskatchewan Inc. dropped 1.9 percent to C$55.16. The world’s largest fertilizer producer by market value was cut to “sector perform” from “sector outperform” by Scotia Capital, even after its second-quarter earnings beat the average analyst estimate by 14 percent. Potash’s earnings have risen to levels that are unsustainable beyond 2015-2016, Scotia analysts led by Ben Isaacson wrote in a report.

Imax Corp., which makes widescreen projection technology, tumbled 6.4 percent to C$18.19. The shares fell 33 percent this week, the most since August 2006. The company said “disappointing film performance” contributed to a drop in second quarter profit.

To contact the reporters on this story: Matt Walcoff at Mwalcoff1@bloomberg.net; Victoria Taylor in New York at vtaylor6@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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