Canada Stocks Drop as Commodities Producers, Financials Retreat

Canadian stocks declined a third day, with the benchmark index erasing a gain for the year, as financial shares retreated and commodities producers slumped with oil and metals prices.

Bank of Montreal sank 2.1 percent after F&C Asset Management Plc said it’s in talks to be bought by the Canadian lender. Horizon North Logistics Inc. plunged 12 percent after the oil services provider reported a drop in preliminary fourth-quarter earnings. Pacific Rubiales Energy Corp. lost 4.2 percent as the price of crude fell a second day.

The Standard & Poor’s/TSX Composite Index decreased 135.47 points, or 1 percent, to 13,582.29 at 4 p.m. in Toronto. The gauge closed at a three-week low after plunging 2.9 percent since Jan. 22, the biggest three-day slide since June. The index has fallen 0.3 percent this year after rising as much as 2.7 percent earlier in January.

“We’ve had strong markets for a while so we’re due for a checkback,” Jeff Young, chief investment officer at NexGen Financial Corp., said in a phone interview. The Toronto-based firm manages about C$900 million ($815 million). “Financials seem to be the big culprit here. The global markets certainly don’t help. The S&P/TSX is certainly impacted by global growth and more so by emerging markets growth than the U.S.”

Emerging-market stocks have had the worst start to a year since 2009 and currencies from Turkey to South Korea tumbled amid signs growth is slowing in China as the Federal Reserve prepared to review further stimulus cuts this week.

The MSCI Emerging Markets Index slid 1.8 percent, extending this year’s decline to 7 percent.

Consumer Confidence

The Bloomberg Nanos Canadian Confidence Index fell for the second straight reading as optimism about the economy waned during a week where the nation’s currency depreciated to the lowest in more than four years. Consumers grew more pessimistic about their personal finances, the national economy and job security, survey data show.

The Canadian dollar depreciated to the lowest in 4 1/2 years against its U.S. counterpart on Jan. 22 after the Bank of Canada kept its benchmark interest rate unchanged and said the strength of the currency is hurting exporters.

Nine of 10 main industries in the index retreated at least 0.3 percent, on trading volume that was 4 percent above the 30-day average.

Financial stocks, which account for 34 percent of the benchmark index for Canadian equities, dropped 1.5 percent today for a third day of declines. The group of banks and insurers has fallen 3.3 percent this year after rallying 19 percent in 2013.

Bank Stocks

Bank of Nova Scotia sank 2.2 percent to C$61.69, a three-month low. Royal Bank of Canada lost 1.3 percent to C$69.38, the lowest since Dec. 18.

Bank of Montreal fell 2.1 percent to C$70.46, the lowest this year. Canada’s fourth-largest lender by assets offered about 697 million pounds ($1.2 billion) for F&C Asset Management, the London-based money manager said in a statement today.

Energy stocks declined 0.9 percent as a group as oil dropped for a second day. Pacific Rubiales plunged 4.2 percent to C$16.50, the lowest level since February 2010. TransGlobe Energy Corp. retreated 4.8 percent to C$8.82.

Horizon North plunged 12 percent to C$7.24, the lowest since September. The company reported that preliminary fourth-quarter earnings excluding some items dropped as much as 65 percent from the prior quarter. Revenue for the Calgary-based oil-and-gas service provider decreased as much as 40 percent in the same period.

Gold Miners

Raw-materials producers in the benchmark index slid 1.3 percent as copper capped its longest slump in five months. Turquoise Hill Resources Ltd. fell 2.3 percent to C$3.89.

The S&P/TSX Gold Index lost 2.5 percent, the biggest drop this year. China Gold International Resources Corp. tumbled 6.7 percent to C$3.07 and NovaGold Resources Inc. slipped 6.1 percent to C$3.21. B2Gold Corp. dropped 4.9 percent to C$2.54.

Hudson’s Bay Co. rose 1.2 percent to C$16.34, erasing an earlier drop of 3.9 percent. The retailer announced it will sell its Toronto location for C$650 million in a sale and leaseback transaction. Proceeds of the transaction will be used to reduce debt and invest in growth initiatives, Hudson’s Bay said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE