Canadian stocks dropped for a second day after U.S. manufacturing unexpectedly contracted in May and Goldman Sachs Group Inc. advised selling shares of Canadian Natural Resources Ltd.
Eight of 10 groups in the Standard & Poor’s/TSX Composite Index retreated, with health-care companies contributing most to the decline as Valeant Pharmaceuticals International Inc. slid the most in almost a year. Canadian Natural Resources declined 2.1 percent for a third day of losses. Bellatrix Exploration Ltd. plunged 6.4 percent after saying a joint venture with a Korean partner will not be continued past May 31.
The S&P/TSX fell 40.62 points, or 0.3 percent, to 12,609.80 at 4 p.m. in Toronto. The index has climbed 1.4 percent this year. Trading volume was 9.5 percent lower than the 30-day average.
“After the very good first couple of quarters in the U.S. and Canada, people are taking a bit of a pause before seeing where to go from here,” said Brian Huen, managing partner with Red Sky Capital Management Ltd. in Toronto. He helps manage C$220 million ($213 million). “There’s still lots of chatter around the Fed and whether stimulus gets taken out of the market sooner rather than later. Gold is rallying a little bit here as people are looking for protection against the risk-off trade.”
Data today fueled concern that growth in the U.S., the world’s largest economy and Canada’s biggest trading partner, could slow, as a report from the Institute for Supply Management showed manufacturing unexpectedly contracted in May at the fastest pace in four years.
U.S. equities reversed earlier losses after a Federal Reserve official said the central bank remains committed to unprecedented levels of stimulus that have helped fuel a five-year market rally.
Eight out of 10 industries in the S&P/TSX retreated, led by health-care and phone stocks.
Valeant slumped 4.9 percent to C$90.69, the biggest loss since June 2012, after its Ucyclyd Pharma Inc. subsidiary completed a deal to sell Buphenyl tablets and powder, used to treat urea cycle disorders, to Hyperion Therapeutics Inc. Hyperion paid $19 million to purchase Buphenyl, and received about a $30 million payment from Ucyclyd, the company said in a release. Valeant has risen 53 percent this year.
Cellular phone companies fell after the Canadian Radio-television and Telecommunications Commission, the nation’s wireless regulator, issued a code of conduct that will allow users to terminate contracts after two years without cancellation fees and limit extra data and roaming charges.
BCE Inc. dropped 1.1 percent to C$46.07, Telus Corp. declined 0.9 percent to C$35.79 and Rogers Communications Inc. slipped 0.5 percent to C$46.77.
Canadian Natural Resources sank 2.1 percent to C$30.24 after Arjun Murti, an analyst with Goldman Sachs, lowered the stock’s rating to sell from neutral. The company has 19 buys, five holds and two sell ratings, according to data compiled by Bloomberg.
Bankers Petroleum Ltd. dropped 3.4 percent to C$2.85 after Christopher Jost, analyst with Goldman Sachs, reduced the stocks’s rating to neutral from buy. The stock has 14 buys and four holds.
Materials shares slipped 0.1 percent as a group. China Gold International Resources Corp. dropped 4.4 percent to C$3.24. Potash Corp. of Saskatchewan Inc. decreased 2.4 percent to C$42.81.
The price of gold for August delivery gained 1.4 percent to settle at $1,411.90 an ounce in New York. The S&P/TSX Gold Index rallied 0.8 percent to a seven-week high. Centerra Gold Inc. jumped 9.2 percent to C$4.17 and Premier Gold Mines Ltd. added 5.5 percent to C$2.32.
Copper Mountain Mining Corp. surged 10 percent to C$1.73. Copper climbed 1.2 percent to settle at $3.3305 a pound in New York, the most in almost four weeks. Aluminum, lead, tin and zinc also advanced in London.
Bellatrix Exploration Ltd. plunged 6.4 percent to C$5.10, the lowest since Feb. 12, after announcing that a Korean company that was intended to be a partner for a joint venture was not able to meet a May 31 deadline to close the $300 million Cardium Join Venture project. Bellatrix will consider other partners.