Canadian stocks fell, sending the Standard & Poor’s/TSX Composite Index to a five-month low, after the central bank cut its growth outlook and said that economic slack will persist for more than two years.
Lundin Mining Corp. sank 9.9 percent after the Democratic Republic of Congo banned exports of copper and cobalt concentrates. Barrick Gold Corp. plunged to a 20-year low after Moody’s Investors Service said it was reviewing its debt for possible downgrade. Teck Resources Ltd., Canada’s largest diversified miner, and First Quantum Minerals Ltd. slid at least 5 percent as copper had the biggest decline in more than a year. Suncor Energy Inc. and Canadian Natural Resources Ltd. lost more than 1.5 percent as oil fell for the fourth time in five days.
The S&P/TSX fell 172.63 points, or 1.4 percent, to 11,947.29 at 4 p.m. in Toronto, the lowest since Nov. 16. The benchmark equity gauge has fallen 3.9 percent this year.
“When you look at what drives commodity prices, a very important factor is global GDP growth and estimates have come down,” said Anish Chopra, fund manager with TD Asset Management Ltd. in Toronto. The firm manages C$204 billion ($200 billion). “You’re seeing this reaction in copper and oil as demand for these products goes down in an environment of slower economic growth.”
The Bank of Canada cut its growth forecast for 2013 to 1.5 percent from 2 percent as “a material degree of slack has re-emerged in the Canadian economy,” policy makers with the bank said today. The bank also held the benchmark interest rate at 1 percent for the 21st consecutive meeting, as expected by all 23 economists surveyed by Bloomberg.
Raw-materials, energy producers and banks contributed most to losses in the S&P/TSX as eight of 10 industries retreated. Trading volume was 35 percent higher than the 30-day average.
Barrick, the world’s largest gold producer, slumped 5.8 percent to C$18.12, the lowest level since 1993. About $7.45 billion of debt was placed under review for downgrade, Moody’s said in a statement today.
Barrick faces challenges in its Pascua Lama project after the Chilean government filed an injunction halting construction due to environmental concerns, Moody’s said.
Suncor, Canada’s largest oil producer, dropped 1.5 percent to C$27.98 and Canadian Natural Resources lost 1.7 percent to C$29.53. Crude for May delivery declined 2.3 percent to settle at $86.68 a barrel in New York. Energy shares closed at the lowest level since November. Gold stocks tumbled to the lowest since October 2008.
Bank of Nova Scotia, the nation’s third-largest lender, dropped 1.5 percent to C$56.83 while Manulife Financial Corp., Canada’s largest insurance company, lost 2.1 percent to C$13.87 as 40 of 44 stocks in the S&P/TSX Financials Index fell.
The central bank said consumer debt will likely stabilize around the current record 165 percent of disposable income, which has been elevated in part due to a surge in home purchases since the 2008 financial crisis.
There are signs of “overbuilding” of multiple-unit housing such as condos in some cities, the Bank of Canada said. The federal government has acted four times to make mortgage lending rules more restrictive.
Lundin Mining tumbled 9.9 percent to C$3.73 after the Democratic Republic of Congo banned exports of coper and cobalt concentrates to force mining companies to add value to the minerals before shipping them. Lundin owns a 24 percent stake in the Tenke mining project, the largest in the country, which produced 11,669 metric tons of cobalt last year.
First Quantum Minerals plunged 9.4 percent to C$15.43 and Teck Resources tumbled 5 percent to C$25.42. Copper for July delivery slid 3.6 percent to settle at $3.2025 a pound in New York, the biggest decline in 16 months.
The S&P/TSX Materials Index slumped 3.9 percent to the lowest level since March 2009.
The International Monetary Fund said yesterday the global economy will expand 3.3 percent this year, less than January’s 3.5 percent forecast, while also cutting its projection for expansion in China, the world’s biggest copper consumer.