Canadian stocks fell, after reaching a two-year high last week, as a slump in technology and industrial shares offset a rise in gold producers while investors watched for signs the U.S. Federal Reserve will continue monetary stimulus.
TransCanada Corp. retreated 1.2 percent after the natural-gas transmission company pushed the start date for the Keystone XL pipeline project into 2016. Alacer Gold Corp. and Barrick Gold Corp. gained at least 1.3 percent, pacing advances among gold miners. Sears Canada Inc. (SCC) climbed to a two-year high after the retailer reported a rise in same-store sales and said it will pay a special dividend to shareholders.
The Standard & Poor’s/TSX Composite Index fell 15.46 points, or 0.1 percent, to 13,442.6 at 4 p.m. in Toronto, after gaining as much as 0.3 percent earlier in the day. The gauge has climbed 8.1 percent this year.
“We’re at the end of the earnings cycle, so the focus goes away from individual stocks reporting earnings to more macro events like tapering,” Ian Nakamoto, director of research with MacDougall MacDougall & MacTier Inc., said in a phone interview from Toronto. The firm manages about C$4 billion. “The FOMC release their minutes tomorrow, so any other hints on what they’re thinking in terms of tapering might give us some clues.”
Equities have rallied this year as the U.S. Fed embarked on a monthly $85 billion bond-buying program to stimulate the economy. Fed policy makers will probably scale back the pace of asset purchases at their March 18-19 meeting, according to the median of 32 estimates in a Bloomberg survey of economists on Nov. 8. The central bank tomorrow releases the minutes from the October meeting of the Federal Open Market Committee.
The Organization for Economic Cooperation and Development cut its global growth forecasts for this year and next as emerging-market economies including India and Brazil cool. The world economy will probably expand 2.7 percent in 2013 and 3.6 percent in 2014, instead of the 3.1 percent and and 4 percent predicted in May, the Paris-based OECD said in a semi-annual report today.
The Bank of Canada will probably raise its benchmark lending rate at the end of next year to avoid a build-up of inflation, the OECD said. The first increase in the 1 percent rate since 2010 is projected to be in the fourth quarter of 2014, with the central bank raising it to 2.25 percent by the end of 2015, the OECD said.
Investors have been paring bets on higher borrowing costs after Governor Stephen Poloz unexpectedly dropped the central bank’s rate-increase bias at its last announcement Oct. 23, citing greater slack in the economy.
Six of 10 S&P/TSX industries fell on trading volume in line with the 30-day average. Technology companies declined 1.2 percent for the worst performance. BlackBerry Ltd. fell for a fourth straight session losing 1.7 percent to $6.31. Industrial shares slipped 0.7 percent today.
TransCanada retreated 1.2 percent to C$46.75, the lowest since Oct. 24. Facing delays from a U.S. review of its Keystone XL pipeline, the natural gas transmission company pushed the forecast startup date for the $5.4 billion project into 2016. Calgary-based TransCanada hopes for U.S. approval in early 2014, Chief Executive OfficerRuss Girling said today at an investor presentation in Toronto.
The S&P/TSX Gold Index gained 0.6 percent as miners advanced. Barrick Gold rose 1.3 percent to C$18.67 and Alacer Gold added 2.3 percent to C$2.25.
Gold and silver equities are “bottoming” and will go on to outperform the metals when a recovery finally begins, said Peter Grosskopf, the chief executive officer of Canadian money manager Sprott Inc. While both commodities have declined this year, they will eventually erase the losses and rise to records as more money is printed around the world, Grosskopf said in a Nov. 15. phone interview. Gold and silver producers will emerge stronger from the downturn as the weak are “weeded out,” he said.
Coastal Energy (CEN) Co. surged 27 percent to C$18.84 after Cia. Espanola de Petroleos SA, an oil refiner owned by Abu Dhabi, agreed to buy Coastal Energy as the Middle East sheikdom adds to crude and natural-gas assets in Southeast Asia. The venture will take on Coastal Energy’s C$51 million of net debt as part of the deal, due to close in the first quarter.
Sears Canada jumped 6.4 percent to C$17.87, the since June 2011, after the company said it will pay a special dividend of C$5 on Dec. 6. The retailer also posted its first quarterly same-store sales increase since 2008, boosted by stronger demand for apparel, accessories and home items.
Intertape Polymer Group Inc., a producer of plastic packaging for industrial use, jumped 6.8 percent to C$13.37 for the biggest increase in the benchmark index. The company was upgraded to a buy rating from market perform by Cormark Securities analyst Sarah Hughes.
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