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Canada Stocks Drop After Fed Official’s Comments Amid Earnings

Canadian stocks fell, snapping a five-day rally for the benchmark index, after financial shares declined as investors weighed earnings reports and a Federal Reserve official’s comments about U.S. stimulus efforts.

Sun Life Financial Inc. lost 1.2 percent after its profit slumped. Detour Gold Corp. fell 7.4 percent after cutting its annual output forecast from its new Detour Lake project in Ontario. Canadian Tire Corp. (CTC/A) soared 11 percent on plans to create a real estate investment trust for its properties. Bombardier Inc. (BBD/B) advanced 5.7 percent after confirming the first test flight for its CSeries jetliner next month.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 41.15 points, or 0.3 percent, to 12,543.90 at 4 p.m. in Toronto. The benchmark equity gauge has added 0.9 percent this year.

Stocks fell after Fed Bank of Philadelphia President Charles Plosser said he would favor reducing the U.S. central bank’s $85 billion monthly pace of bond purchases next month. The Standard & Poor’s 500 Index has surged 14 percent so far this year amid optimism central banks will continue to use stimulus to support economic growth.

Investors also watched corporate earnings. With 161 of 237 companies in the S&P/TSX reporting so far this period, 58 percent have missed sales expectations and 54 percent have posted declining earnings, according to data compiled by Bloomberg.

Earnings Season

“In Canada it’s about earnings season,” said Michael O’Brien, fund manager with TD Asset Management in Toronto. He manages about C$3 billion ($3 billion). “Results are fairly mixed, we’ve had a fair number of high-profile Canadian companies with weak results. We haven’t seen big beats. It’s a reflection of the Canadian economy, it’s a bit soft and the end results are soft.”

Financial stocks contributed most to losses in the S&P/TSX, sliding 1 percent as a group as six of 10 industries retreated. Royal Bank of Canada lost 0.8 percent to C$61.62 and Bank of Montreal declined 0.9 percent to C$62.76.

Sun Life, Canada’s third-largest insurer, dropped 1.2 percent to C$29.23 after reporting a 25 percent drop in net income to C$513 million from a year earlier.

Detour Gold slumped 7.4 percent to C$11.41. The company said it’s taking longer than expected to increase output levels at the Detour Lake operation, where the first gold bars were poured in February. Detour still expects to reach commercial production levels in the third quarter.

Jobless Claims

Goldcorp Inc. tumbled 1.2 percent to C$30.03 while Barrick Gold Corp. erased 2.1 percent to C$21.06. Gold futures fell 0.3 percent after a report showed the number of Americans filing claims for jobless benefits unexpectedly dropped last week.

Canadian Tire, the nation’s largest sporting goods retailer, jumped 11 percent to C$82.36, the highest level since 2007. The company said it will create a REIT worth C$3.5 billion that will acquire most of its 250 retail stores and a distribution center. Canadian Tire plans to keep 80 percent to 90 percent of the REIT. The properties represent about 18 million square feet.

Bombardier gained 5.7 percent to C$4.47. The company stuck to its goal of first takeoff for the CSeries in June after the delayed jetliner performed well on flight-safety tests that included bending the wings to gauge structural integrity.

Thompson Creek Metals Co. surged 18 percent to C$3.85 for the biggest increase in the S&P/TSX. The molybdenum producer broke even in the first three months of this year, ending three quarters of losses. BB&T Capital Markets boosted the stock’s rating to buy from hold.

Bankers Petroleum Ltd. rallied 13 percent to C$2.86. The oil and gas company said first-quarter profit doubled from a year earlier to 6 cents a share.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

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

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