Canadian stocks fell for the third time in four days as energy shares slid the most in almost a year after BlackPearl Resources Inc. cut its oil production forecast and crude prices declined.
BlackPearl, an oil and gas exploration company, retreated 9.5 percent. Crew Energy Inc. and Birchcliff Energy Ltd. fell at least 7.3 percent. Linamar Corp., a maker of auto parts, advanced 12 percent after reporting higher-than-estimated profit. Mitel Networks Corp. gained 13 percent after saying it would save more money from its merger with Aastra Technologies Ltd. than originally projected.
The Standard & Poor’s/TSX Composite Index fell 110.37 points, or 0.8 percent, to 14,546.03 at 4 p.m. in Toronto, the worst drop in four weeks. Energy stocks fell 2.2 percent as a group, the biggest decline since last June. The decline pared the industry’s gain this year to 13 percent.
“The market got very concentrated in the performance of energy and obviously it’s a profit taking wave that sort of fed on itself,” said Bob Decker, a fund manager at Aurion Capital Management Inc. in Toronto. His firm manages about C$6.6 billion.
West Texas Intermediate crude dropped, after rallying yesterday the most in a month, as supplies climbed to a seasonal record high amid weak demand.
“I don’t see anything fundamentally that changed dramatically other than the fact that stocks are overbought and it’s a technical correction,” Decker said. “Usually bull market corrections like this are short and sharp.”
BlackPearl Resources plunged 9.5 percent to C$2.77, the most since July. Macquarie Research cut its rating on the stock to neutral, the equivalent of a hold, from outperform. The company reported first-quarter production short of his projections, according to a note by analyst Chris Feltin.
“We see better growth from other mid-caps in our coverage,” he said.
Canada’s equity benchmark trades for 20 times reported earnings, the highest level since 2011, data compiled by Bloomberg show. The S&P/TSX has almost doubled since the bull market began in U.S. equities began in March 2009.
Linamar rose 12 percent to C$58.89, an all-time high. The company reported first-quarter profit of C$1.23 a share, exceeding analysts’ estimates of C$0.98. The stock is up 132 percent in the last year.
“There’s a scarcity of good-quality stocks in Canada that are growing at a rate like Linamar,” said Decker.
Mitel rose 13 percent to a record C$11.87. The communications equipment provider said it would save an extra $25 million on cost efficiencies from its acquisition of Aastra, according to a statement.
Lundin Mining Corp. gained 1.3 percent to C$5.50, and First Quantum Minerals Ltd. added 1.9 percent to C$20.74. Copper rose 0.9 percent in New York as data showed China’s exports and imports unexpectedly rose in April. The country is the world’s largest consumer of industrial metals.
Avigilon Corp., a maker of surveillance equipment, sank 15 percent to C$20.35 for a third day of losses. The company said earlier this week that Brad Bardua, the chief financial officer, resigned for health reasons. The stock has slumped 23 percent in the past three days.