Canadian stocks fell for a second day as BlackBerry (BB) Ltd. plunged the most in three months and gold producers slumped after a Federal Reserve policy maker said a small tapering of bond buying is possible next month.
BlackBerry tumbled 16 percent after saying it will cut 4,500 jobs and record an inventory writedown of as much as $960 million after a new set of devices failed to catch on with consumers. Iamgold Corp. and Eldorado Gold Corp. retreated at least 7.7 percent as gold fell the most in 11 weeks. Goldcorp Inc. slid 3.8 percent after Chairman Ian Telfer agreed to pay a C$200,000 ($194,000) fine in a settlement over allegations that he violated securities laws.
The Standard & Poor’s/TSX Index fell 120.31 points, or 0.9 percent, to 12,806.47 at 4 p.m. in Toronto, paring a weekly gain of 0.7 percent. Trading volume was 117 percent higher than the 30-day average.
Once a quarter, futures and options for indexes and single stocks expire on the same day, leading to a phenomenon called quadruple witching, with increased volume as investors close out their positions.
A comment by Federal Reserve Bank of St. Louis President James Bullard “saying tapering could happen in October got people all nervous, and corresponding with that gold went lower,” said Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto. His firm manages about C$220 million ($213.7 million). “The message is not clear, so there’s some nervousness out there.”
“There’s an index rebalancing happening as well as quadruple witching for options, so you’ll see some volatility at the close,” he said.
Bullard, a voter on policy this year who has backed the Fed’s bond buying, said today the decision not to taper stimulus was a close call and “small” cuts are possible next month. Policy makers meet Oct. 29-30.
The benchmark Canadian equity gauge soared to a two-year high on Sept. 18 after the U.S. Fed said it will “await more evidence” for sustained economic recovery before reducing its $85 billion in monthly bond buying.
Iamgold (IMG) plunged 11 percent to C$5.25 and Eldorado Gold sank 7.7 percent to C$7.15 as gold for December delivery tumbled 2.7 percent to $1,332.50 an ounce in New York, the biggest drop since July 5.
Gold stocks slumped 5.6 percent as a group, the worst decline in six weeks, as all 24 members of the S&P/TSX Gold Index retreated. Nine of 10 industries in the S&P/TSX fell.
BlackBerry, based in Waterloo, Ontario, plunged 16 percent to C$9.08, the most since June 28. The smartphone maker, which is evaluating a sale, expects to report a net operating loss of as much as $995 million for the fiscal second quarter, according to a statement today.
Sales in the quarter were about $1.6 billion, just more than half the $3.03 billion average estimate of analysts surveyed by Bloomberg. The company sold about 5.9 million smartphones in the quarter.
Goldcorp lost 3.8 percent to C$26.96. Telfer, the company’s chairman, was included in an Ontario Securities Commission statement of allegations in February 2012 regarding an alleged insider-trading scheme.
Telfer admitted his conduct fell below standards expected, Cullen Price, representing OSC staff, said at a hearing today in Toronto. In addition to paying a fine to the regulator, Telfer will be banned from arranging the right for people to buy shares in private placements for one year.
S&P Dow Jones Canadian Index Services said on Sept. 13 that it will make changes to the benchmark S&P/TSX at the close today. Additions include Air Canada, the nation’s largest air carrier, and NuVista Energy Ltd. Niko Resources Ltd. will be removed from the index.
Air Canada slid 2.4 percent to C$3.20 and NuVista slipped 4.9 percent to C$7.01. Niko lost 1.2 percent to C$4.07.
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