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Canada Stocks Fall as Commodities Outweigh Profits, China Data

Canadian stocks fell, sending the Standard & Poor’s/TSX Composite Index lower for a fourth day, as declines in commodity shares overshadowed corporations topping earnings estimates and signs that a slump in China’s factory output is easing.

Barrick Gold Corp. (ABX) and Goldcorp Inc. (G) slid at least 0.7 percent as the metal’s price retreated. Encana Corp. (ECA) dropped 3.1 percent after reporting a third-quarter loss. Canadian Pacific Railway Ltd. (CP) jumped 6 percent after reporting its best operating ratio in two years. Rogers Communications Inc. rallied 3.3 percent after posting quarterly profit that beat estimates.

The S&P/TSX (SPTSX) lost 30.82 points, or 0.3 percent, to 12,195.02 in Toronto. The benchmark gauge for Canadian equities has erased 2.2 percent since Oct. 18 amid disappointing earnings results. The index is down 1 percent in October, poised to end four consecutive months of gains.

“Despite some decent economic numbers out of China, there continues to be concern about commodity prices,” Timothy Lazaris, chief executive officer of Red Sky Capital Management Ltd. in Toronto, which oversees C$60 million ($60 million), said in a telephone interview. “The materials and energy sectors are weak again today.”

Raw material companies posted the biggest decline out of 10 groups in the S&P/TSX as the price of gold, copper and silver fell after a bigger-than-expected contraction in euro-area services and manufacturing added to concern that metals demand will slow.

China Manufacturing

Global equities rose earlier after a survey signaled a smaller contraction in China’s manufacturing and a report showed purchases of new homes in the U.S. rose in September to the highest level in more than two years.

Bank of Canada Governor Mark Carney said today the case for higher interest rates in Canada has become “less imminent.” Speaking to reporters in Ottawa, Carney said that over time, interest rates are more likely to go up than not. The nation’s central bank also highlighted record household debt that may trigger a sudden drop in consumer spending in the world’s 11th largest economy.

Commodity companies sank as the Standard & Poor’s GSCI spot gauge of 24 raw commodities fell for the fourth straight session, losing 0.4 percent. The measure erased its gains for the year yesterday, poised for the first annual drop since 2008.

Barrick, the world’s largest gold producer, sank 0.7 percent to C$38.34. Goldcorp, the second-biggest producer, lost 3.5 percent to C$40.79.

Oil Slips

Oil fell for a fifth day, the longest losing streak in five months, after the U.S. Energy Department said supplies rose three times as much as forecast last week, gaining 5.9 million barrels to 375.1 million. An increase of 1.8 million was expected.

Encana, Canada’s largest natural gas producer, dropped 3.1 percent to C$21.86 as third-quarter results were weighed down by a $1.19 billion writedown because of falling fuel prices. Encana’s net loss was $1.24 billion compared with profit of $459 million a year earlier. Operating earnings fell 32 percent to $263 million, or 36 cents a share, from $389 million, or 53 cents, the company said.

Out of 247 companies in the S&P/TSX, 12 have reported earnings results. In the U.S., about 69 percent of the 192 S&P 500 companies that have posted quarterly results beat analysts’ earnings projections.

Canadian Pacific

Canadian Pacific rallied 6 percent to C$93.18 after posting its best operating ratio in two years as new services and terminal closings helped boost profit 20 percent during Hunter Harrison’s first quarter as chief executive officer. That ratio, an industry benchmark of cost against revenue, fell to 74.1 in the third quarter, the lowest since 2010’s third quarter, based on data compiled by Bloomberg.

Rogers Communications added 3.3 percent to C$42.43. Canada’s largest wireless carrier reported third-quarter profit that surpassed estimates, helped by an 18 percent jump in smartphone data spending and job cuts. Profit rose to 96 Canadian cents a share, excluding stock-based compensation expenses and restructuring and acquisition costs, beating the average estimate of 89 cents.

Teck Resources Ltd. (TCK/B) rose 2.8 percent to C$31.39. Canada’s largest diversified miner said third-quarter adjusted earnings were 60 cents a share, exceeding the average analyst estimate by 1 cent.

To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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