Energy's Decline a Drag on Canada Stocks as Oil, Gas Prices Drop

  • Bloomberg Commodity Index heads for fourth monthly retreat
  • Railways drop ahead of CN earnings as industrials tumble 2.9%

Canadian equities fell, capping the biggest two-day decline since September, as a renewed selloff in crude sent energy stocks to a three-week low while industrial shares tumbled on concern transportation volumes may slide.

Energy producers, the worst-performing industry in Canada this year, lost 1.6 percent as the persistent supply glut sent crude to a two-month low. Materials producers also retreated as the Bloomberg Commodity Index headed for a fourth straight monthly slide. Railroads led a 2.9 percent rout in industrial stocks, as transportation shares slid on concern that slowing U.S. industrial activity is hurting cargo demand.

The Standard & Poor’s/TSX Composite Index fell 91.30 points, or 0.7 percent, to 13,699.60 at 4 p.m. in Toronto. The gauge tumbled 1.2 percent yesterday and has now trimmed its October advance to 3 percent, still on pace for the biggest monthly increase since February. 

U.S. orders for business equipment unexpectedly declined in September as tepid global markets gave American companies little reason to expand. The latest data comes as the Federal Reserve begins two days of meetings with the central bank widely expected not to raise interest rates.

Canadian industrial stocks slipped the most among 10 major groups Tuesday. Canadian Pacific Railway Ltd. tumbled 4.7 percent, the most in three months, and Canadian National Railway Co. lost 2.8 percent to lead industrial stocks lower. Canadian National reported third-quarter earnings after the market close, including revenue of C$3.22 billion, ahead of estimates for C$3.15 billion.

Commodities producers retreated, led by declines among oil stocks. Crescent Point Energy Corp. dropped 2.2 percent and Canadian Natural Resources Ltd. lost 2.5 percent. WTI crude was down 1.8 percent in New York, failing to sustain a rally earlier this month to $50 a barrel amid surging U.S. inventories.

Valeant Pharmaceuticals International Inc., the drugmaker under scrutiny for its accounting and pricing practices, ended the day little-changed after touching a one-year low yesterday. Bill Ackman, the billionaire activist investor, will discuss his holding in Valeant on a conference call with other investors Friday. Ackman’s fund Pershing Square Holdings Ltd. is Valeant’s third-biggest holder, according to a June 30 regulatory filing.

Shares of Laval, Quebec-based Valeant plummeted 32 percent last week, the most since 1993, after short-seller Citron Research said Valeant is using Philidor to store inventory and record those transactions as sales. Valeant denied the accusations, saying that sales are recorded only when the drugs are sent to patients.

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