Canada Stocks Fall Second Day as Oil Slides, Earnings Disappoint

Updated on
  • Imperial Oil profit slumps 85% as output increased amid glut
  • About half of S&P/TSX companies set to report in next 2 weeks

Canadian stocks retreated a second day as crude prices dropped below $30 a barrel before weekly U.S. government stockpile data and the first of the nation’s energy producers reported a slump in quarterly earnings, hinting at more carnage for the beleaguered industry.

Imperial Oil Ltd. lost 1.8 percent for a third straight decline after saying fourth-quarter profit sank 85 percent. WestJet Airlines Ltd. plunged 11 percent for the biggest one-day drop in 13 years after quarterly earnings missed estimates.

The Standard & Poor’s/TSX Composite Index fell 1.8 percent to 12,442.26 at 4 p.m. to join a global selloff in equities, as crude’s renewed plunge in February erased memories of its brief rally at the end of last month.

Even with a 4.4 percent drop so far in 2016, Canada’s equity benchmark remains the second-best performing developed market in the world after rallying from a 2 1/2-year low to close a see-saw January. The S&P/TSX also entered a bear market earlier in the month.

The resource-rich S&P/TSX is closely linked to commodity prices with raw-materials and energy producers making up about 28 percent of the overall gauge. Crude in New York has tumbled 11 percent this week, capping the biggest two-day drop since 2009. U.S. government stockpile data is forecast to show an increase in supplies, exacerbating a global glut.

Calgary-based Imperial Oil is the first of 55 Canadian energy companies in the S&P/TSX to report quarterly earnings. About half of the 240 companies in the benchmark Canadian equity gauge are scheduled to report over the next two weeks.

Imperial Oil, the Canadian affiliate of Exxon Mobil Corp., reported net income in the quarter fell to 12 cents a share from 79 cents a year earlier. Output for the company in the quarter averaged 400,000 barrels per day, compared with 315,000 barrels a year earlier, the company said. Irving, Texas-based Exxon Mobil meanwhile posted its steepest annual profit decline in more than a decade.

Energy stocks sank 2.7 percent as nine of 10 industries in the S&P/TSX fell. Utilities stocks were the only group to advance. Royal Bank of Canada and Manulife Financial Corp. retreated at least 1.7 percent to lead the nation’s largest financial services companies lower.

Sliding share prices among the nation’s largest lenders amid investor concerns about earnings growth and rising loan losses has resulted in bank dividend payouts four times greater than Canada’s benchmark government bond yield, the most in more than a decade, according to data compiled by Bloomberg.

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