Canadian Stocks Retreat to Six-Week Low on Fed Taper Speculation

Canadian stocks fell to a six-week low as the U.S. economy expanded at a faster pace than initially estimated, increasing speculation the Federal Reserve will taper stimulus.

Royal Bank of Canada, the nation’s largest lender, lost 1.2 percent after Chief Executive Officer Gordon Nixon said he will retire next year. Toronto-Dominion Bank, Canada’s second-biggest bank, slid 1.4 percent after reporting earnings that missed analysts’ projections. Goldcorp Inc. and Iamgold Corp. dropped at least 3.5 percent as the price of gold declined. Precision Drilling Corp. plunged 9 percent after a shareholder sold its stake.

The Standard & Poor’s/TSX Composite Index (SPTSX) fell 104.52 points, or 0.8 percent, to 13,200.40 at 4 p.m. in Toronto, the lowest since Oct. 21. The benchmark equity gauge has fallen three straight days, trimming its gain in 2013 to 6.2 percent, the fourth-worst performer among developed markets ahead of Austria, Hong Kong and Singapore.

“The main driver of the markets is when you’re getting the macro data out of the U.S., it’s positive and it really strengthens the case for tapering,” said Anish Chopra, fund manager at TD Asset Management Inc. in Toronto. He helps manage C$218.3 billion ($205 billion) with the firm. “People are concerned with the amount and the timing of tapering, and when you see data like this coming out the last few days it certainly argues for tapering earlier.”

Economic Growth

U.S. third-quarter growth was revised to a 3.6 percent pace from 2.8 percent and the strongest since the first quarter of 2012. Another report showed jobless claims unexpectedly decreased last week. Investors are weighing economic data to determine when the Fed will begin scaling back its $85 billion a month bond-purchasing program.

Canadian building permits jumped 7.4 percent in October as residential projects approached a record. Economists had forecast a 1 percent gain according to the median of nine responses to a Bloomberg survey.

Financial stocks lost 0.8 percent as a group as all 10 industries in the S&P/TSX declined. Trading volume was 24 percent higher than the 30-day average.

Royal Bank fell 1.2 percent to C$68.17. Nixon, 56, will step down as CEO (RY) on Aug. 1 after 13 years leading the Toronto-based bank, the firm said today in a statement. He will be replaced by David McKay, 50, head of personal and commercial banking.

The bank separately reported fourth-quarter adjusted profit of C$1.42 a share, beating the C$1.39 average estimate from analysts in a Bloomberg survey.

Bank Earnings

Toronto-Dominion retreated 1.4 percent to C$94.40, the most since July 30. The lender reported adjusted earnings of C$1.90 a share, missing the C$1.99 average estimate of 11 analysts surveyed by Bloomberg.

Canadian Imperial Bank of Commerce fell 1.4 percent to C$88.82 after net income in the fourth quarter fell 1.9 percent due to costs from reorganizing its Caribbean banking business and the introduction of a credit card.

Goldcorp lost 3.5 percent to C$22.14 and Iamgold retreated 3.9 percent to C$4.17. Gold declined for the third time in four days. Raw-materials stocks tumbled 2.1 percent as a group, the most in the S&P/TSX.

Thompson Creek Metals Co. decreased 7.3 percent to C$2.30. The stock closed at its lowest level since August 2012 after five straight declines erased 23 percent.

Daniel Earle, an analyst with TD Securities, said yesterday the mining company will not be able to generate enough cash to repay $1 billion in debt maturities in 2017 and 2019 assuming the price of gold is $1,300 an ounce and $3 a pound for copper.

Precision Drilling, a drilling and energy services company, sank 9.1 percent to C$9.33, the most since 2011. The Alberta Investment Management Corp. sold its entire stake in the company, chief executive officer Leo De Bever said in a phone interview with Bloomberg News.

Canexus Corp. (CUS), a chemical products manufacturer, jumped 8.7 percent to C$6.63 for the biggest gain since 2009 after agreeing to a long-term, take-or-pay deal with an unidentified logistics and marketing company that Canexus describes as a leader in transporting crude oil by rail.

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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