Canadian stocks fell, erasing gains for the year, as financials and energy producers retreated amid weaker-than-forecast housing construction and growing concern the U.S. Federal Reserve may reduce its bond purchases.
Dream Unlimited Corp., a real-estate manager and developer, lost 2.8 percent to pace declines among financial stocks. Enbridge Inc. and Encana Corp. dropped at least 1.6 percent as energy shares slumped. BlackBerry Ltd. (BB) retreated 3.3 percent as its market share fell. Athabasca Oil Corp. (ATH) surged 10 percent after winning approval for its Dover oil-sands project from an Alberta regulator. Air Canada soared 25 percent as profits topped estimates amid falling fuel costs.
The Standard & Poor’s/TSX Composite Index (SPTSX) fell 56.59 points, or 0.5 percent, to 12,412.73 at 4 p.m. in Toronto. The benchmark Canadian equity gauge lost 1.5 percent over the past two days, and is down 0.2 percent for the year.
“I thought we needed a rest, a slight pause and a correction,” said Ian Nakamoto, director of research with MacDougall MacDougall & MacTier Inc. in Toronto. The firm manages about $4 billion. “If you go up in a straight line you’re in trouble. There’s some worry over the Fed which has caused the market to sell off, and that nervousness has spilled over into today.”
Canadian equities sank 1.1 percent yesterday as comments from a Fed official fueled concern the U.S. central bank may reduce the pace of its monthly bond buying this year. Fed Bank of Chicago President Charles Evans said he “would clearly not” rule out a decision to begin curbing bond purchases in September. Fed Bank of Cleveland President Sandra Pianalto said today that a tapering may be warranted if the labor market continues to strengthen.
Canadian building permits fell for the first time this year in June, declining 10.3 percent to C$6.65 billion ($6.38 billion) as contractors scaled back intentions for new condominiums. Economists surveyed by Bloomberg had forecast a median drop of 2.8 percent.
Dream Unlimited slumped 2.8 percent to C$12.10 as financial stocks dropped 0.6 percent.
Energy stocks declined 0.9 percent, falling the most as seven of 10 industries in the S&P/TSX retreated. Trading volume was 9.1 percent lower than the 30-day average.
Enbridge lost 1.6 percent to C$44.88 and Encana decreased 1.9 percent to C$18.07 as 42 of 58 members in the S&P/TSX Energy Index fell.
Crude for September delivery dropped 0.9 percent to settle at $104.37 a barrel in New York, after the U.S. government reported an unexpected increase in supplies of gasoline and distillate fuels. Economists had forecast stockpiles to decrease.
BlackBerry lost 3.3 percent to C$9.58, snapping five days of gains. BlackBerry’s global smartphone market share in the second quarter fell to 2.9 percent from 4.9 percent a year ago, a report from International Data Corp. said today. Google Inc.’s Android operating system was the top performer, climbing to a 79 percent market share, the report said.
Athabasca Oil jumped 10 percent to C$8.12. With the Alberta regulator approving the Dover oil-sands project, Athabasca can sell its stake in the project, worth about C$1.3 billion, to PetroChina Co. and use the funds for other projects.
Air Canada (AC/B) climbed 25 percent to C$2.65, the most since May 2009, after reporting second-quarter profit that topped analysts’ estimates. The company said it spent C$831 million on fuel in the second quarter, 6 percent less than the same period a year ago. Capacity will grow 9 percent to 11 percent next year as the company adds Boeing Co. 777 and 787 jets.
Valeant Pharmaceuticals International Inc. (VRX) rose 2.1 percent to C$101.70, a record high, after raising its full-year earnings forecast. The drugmaker completed its $8.7 billion acquisition of Bausch & Lomb Inc. this month and expects “significantly more than” $800 million in cost synergies from the combined company.
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