- Oil slides under $40 as OPEC members meets on production
- Bank of Canada holds lending rate at 0.5% amid recovery
Canadian stocks fell the most in three weeks, halting the best two-day advance in two months, as a rout in oil sparked a selloff in commodities shares.
Energy producers dropped 2.8 percent as a group to lead equities lower. Crude futures fell to a six-year low in London and 4.6 percent to settle at $39.94 a barrel in New York on signs of discord among ministers from the Organization of Petroleum Exporting Countries.
Oil has slumped about 40 percent since Saudi Arabia led OPEC’s decision a year ago to maintain output and defend market share against higher-cost shale producers.
The Standard & Poor’s/TSX Composite Index fell 172.24 points, or 1.3 percent, to 13,463.82 at 4 p.m. in Toronto, after a two-day rally of 2 percent. The benchmark equity gauge has dropped 8 percent this year, trailed only by Singapore and Greece among developed markets.
The Bank of Canada kept its key interest rate unchanged at 0.5 percent, where it’s been since July. All 33 economists in a Bloomberg survey predicted no move. The Canadian economy is undergoing a “complex and lengthy adjustment” as non-energy exports and the weaker currency help to contain the damage from lower oil prices, Governor Stephen Poloz said in a statement.
Royal Bank of Canada was little-changed, paring an earlier gain. Fiscal fourth-quarter profit rose 11 percent as a jump in trading revenue and a lower tax rate helped counter slowing earnings growth from Canadian banking and declines across other key businesses.
National Bank of Canada lost 0.5 percent, erasing earlier gains after raising its dividend 3.8 percent amid an increase in fourth-quarter profit. Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Canadian Western Bank report tomorrow. A gauge of the nation’s largest lenders has lost 4.4 percent this year, on track for the first annual decline since 2011.
Energy and raw-materials producers, which account for about 30 percent of the index, have each slumped more than 21 percent this year and are the second and third worst-performing industries in the S&P/TSX ahead of health-care stocks.
A combination of slowing economic growth in China and a rally in the U.S. dollar with impending interest-rate increases from the Federal Reserve as soon as Dec. 16 have crimped commodities prices this year.