Canadian stocks fell for a third day as Standard & Poor’s changed its outlook on the United States’ credit ratings to “negative” and oil and metals producers dropped on falling commodity prices.
Suncor Energy Inc., Canada’s largest oil and gas producer, lost 2.2 percent after Saudi Oil Minister Ali al-Naimi said the “market is oversupplied.” Toronto-Dominion Bank, the country’s second-biggest lender by assets, declined 1 percent after S&P reduced its outlook on the U.S. from “stable,” citing the country’s budget deficit. BlackBerry Research In Motion Ltd. gained 3.3 percent after Barron’s said the shares may double.
The Standard & Poor’s/TSX Composite Index decreased 96.79 points, or 0.7 percent, to 13,702.33, the lowest close since March 16.
“It brings into focus there’s some hard choices to be made, and nobody knows if the U.S. is being run by adults or petulant children,” said David Baskin, president of Baskin Financial Services Inc. in Toronto, which manages C$400 million ($414 million). “The U.S. is the biggest economy in the world, and 75 percent of our exports go there.”
The S&P/TSX fell for the first time in five weeks last week as the International Monetary Fund cut its growth forecast for the U.S. and investors speculated China would tighten credit to fight inflation. The People’s Bank of China increased banks’ reserve requirements for the fourth time this year yesterday.
In a public statement, S&P said “there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013.”
The U.S. projects its deficit will total 10.9 percent of gross domestic product this year. President Barack Obama has set a target of reducing the deficit to 2.5 percent of GDP by 2015.
The S&P/TSX Energy Index dropped to the lowest since Jan. 28 as crude declined for the first time in four days.
Suncor lost 2.2 percent to C$41.14. Talisman Energy Inc., an oil and gas producer with operations in North America, the North Sea and Indonesia, slumped 1.5 percent to C$22.04. Cenovus Energy Inc., Canada’s fifth-biggest energy company, decreased 2.1 percent to C$35.18.
An index of S&P/TSX financial companies retreated to the lowest level in a month. TD fell 1 percent to C$81.28. Royal Bank of Canada, the country’s largest lender by assets, slipped 0.5 percent to C$59.73. Manulife Financial Corp., North America’s fourth-biggest insurer, dropped 1.6 percent to C$16.18.
Metal, Coal Producers
S&P/TSX base-metals and coal producers fell for a sixth day, the longest streak of declines since May, after China raised banks’ reserve requirement to a record 20.5 percent from 20 percent. Copper also slipped for a sixth day.
Teck Resources Ltd., Canada’s largest base-metals and coal producer, retreated for a ninth day, the longest streak of losses since 2006, falling 2.1 percent to C$48.77. First Quantum Minerals Ltd., the country’s second-biggest publicly traded copper producer, decreased 1.9 percent to C$116.80. Grande Cache Coal Corp., which mines in Alberta, sank 7.5 percent to C$8.31.
Capstone Mining Corp., which produces copper in Mexico, slumped 4.3 percent to C$4.03 after agreeing to buy Far West Mining Ltd. for C$725 million in cash and stock. Far West, which is developing a mine in Chile, surged 7.3 percent to a record C$8.24.
Gold, U.S. Dollar
Precious-metals producers retreated as the U.S. dollar rose as much as 1.9 percent, the most since November, against the euro. Greek and Portuguese bond yields extended records on concern about the possibility of sovereign-debt defaults.
Kinross Gold Corp., Canada’s third-largest gold producer, fell 2.5 percent to C$14.67. Silver reseller Silver Wheaton Corp. dropped 2 percent to C$40.10. First Majestic Silver Corp., which mines in Mexico, declined 3.5 percent to C$21.91.
Eastern Platinum Ltd., which mines in South Africa, tumbled 15 percent, the most since November 2008, to C$1.10 after saying first-quarter production fell 17 percent from last year.
Lumber producers Canfor Corp. and West Fraser Timber Co. dropped after Paul C. Quinn, an analyst at Royal Bank of Canada, cut his ratings on the shares to “underperform” from “sector perform.” In a note to clients, Quinn cited the decline in lumber prices and rise of the Canadian dollar.
West Fraser, Canada’s largest lumber producer, declined 6.8, the most since August 2009, to C$54.64. Canfor plunged 9.8 percent, also the most in 20 months, to C$12.56.
RIM rose 3.3 percent from a five-month low to C$52.84 after Barron’s said the shares may gain as the company releases new products. Canada’s biggest technology company has fallen eight-straight weeks, the most since 2006, as it forecast profit below analysts’ estimates and its PlayBook tablet generated negative reviews from some media.