Canadian stocks fell for the first time in five days amid a global equity selloff as China’s manufacturing industry unexpectedly contracted.
Teck Resources Ltd., Canada’s largest diversified miner, and First Quantum Minerals Ltd. fell at least 2.8 percent as base metal prices declined. Suncor Energy Inc. lost 0.6 percent as crude retreated for a third day. Toronto-Dominion Bank, Canada’s second-largest bank, dropped 0.5 percent after reporting adjusted earnings that missed estimates. Kirkland Lake Gold Inc. and Kinross Gold Corp. rallied more than 1.9 percent as gold snapped two days of losses.
The Standard & Poor’s/TSX Composite Index fell 94.41 points, or 0.7 percent, to 12,658.09 at 4 p.m. in Toronto. The benchmark equity gauge has gained 1.8 percent this year. Trading was 15 percent below the 30-day average.
“Manufacturing data tells you a lot about where markets are going, and they’ve been weak for some time,” said John Stephenson, a fund manager with First Asset Investment Management Inc. in Toronto. Stephenson helps manage C$2.7 billion ($2.6 billion) at the firm. “Seeing the slowdown in the China data confirms that. It’s a negative for stocks.”
China manufacturing is contracting in May for the first time in seven months. The preliminary reading of 49.6 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with a final 50.4 for April and the 50.4 median estimate in a Bloomberg News survey. A reading above 50 indicates expansion.
The MSCI All-Country World Index slumped 1.3 percent for the biggest decline since April. Japan’s Topix Index plunged 6.9 percent, the most since March 2011. The S&P 500 lost 0.3 percent.
“It’s a combination of the China data and the reaction that’s happening in the rest of the world,” Anish Chopra, a fund manager with TD Asset Management Ltd., said from Toronto. He helps manage C$204 billion with the firm. “Japan has fallen quite a bit and it’s rippled through the rest of the markets worldwide. The Japanese equity market has been up substantially year-to-date, so a pullback seems reasonable.”
All 10 groups in the S&P/TSX fell, with industrial and health-care stocks dropping at least 1.2 percent.
Teck Resources dropped 4.3 percent to C$28.20 and First Quantum slid 2.8 percent to C$18.69 as raw-materials producers declined 0.9 percent as a group. Copper, used in building construction, fell 2.3 percent to settle at $3.304 a pound in New York, the biggest decline since May 1. Aluminum, nickel, lead, tin and zinc prices were also lower in London.
Suncor, Canada’s largest oil producer by market value, lost 0.6 percent to C$32.32. Athabasca Oil Corp. dropped 2.7 percent to C$6.42 and Penn West Petroleum Ltd. fell 2.1 percent to C$10.14. The price of crude retreated 3 cents to settle at $94.25 a barrel in New York, paring earlier losses of as much as 2.2 percent.
TD Bank dropped 0.5 percent to C$83.65 after reporting adjusted second-quarter earnings of C$1.90 a share, missing the C$1.91 average estimate of 13 analysts compiled by Bloomberg.
Kirkland Lake Gold rallied 5.7 percent to C$4.46 and Kinross Gold Corp. climbed 1.9 percent to C$6.02. The precious metal’s price advanced 1.8 percent to settle at $1,391.80 an ounce in New York, the biggest gain since April 25.