- RBC drops after first-quarter profit falls short of estimates
- Encana surges as energy producer cuts costs amid crude tumble
Canadian stocks fell a second day, paring losses in afternoon trading as energy producers led by Encana Corp. rebounded with crude, offsetting a decline by lenders as investors weighed earnings from Royal Bank of Canada.
The Standard & Poor’s/TSX Composite Index slipped 0.2 percent to 12,740.27 at 4 p.m. in Toronto, largely reversing a loss of as much as 2 percent. The benchmark gauge has lost 0.6 percent in February, headed for a fourth monthly decline, as volatility returned to global markets after a respite last week. Global-growth concerns have resurfaced as investors look to whether lenders will suffer as some energy producers struggle amid low oil prices.
The S&P/TSX remains among the best-performing markets in the developed world this year, trailing New Zealand and topping returns from markets in the U.S., U.K. and Germany. Shares in the Canadian benchmark trade at about 19.5 times earnings, about 1.1 times more expensive than the valuation of S&P 500 shares, according to data compiled by Bloomberg.
A jump in gold due to demand for havens has caused raw-material stocks to be the best-performing group in the S&P/TSX in 2016. Still, energy companies have weighed on returns, as oil trades near the lowest levels in 12 years.
Financial services stocks sank the most on Wednesday, as five of 10 industries in the S&P/TSX retreated.
Royal Bank of Canada slumped 2.6 percent, the biggest decline in a month, on first-quarter profit that fell short of analysts’ estimates as earnings from insurance and capital markets fell. The lender set aside more money for soured energy loans amid crude’s slide. RBC is the third to report results this week, followed by Toronto-Dominion Bank and Canadian Imperial Bank of Commerce tomorrow.
West Texas Intermediate, the U.S. benchmark for crude, rose 0.9 percent to settle at $32.15 a barrel, reversing losses as cheap gasoline boosted U.S. demand and sent inventories lower, according to government data. Supplies fell 2.24 million barrels to 256.5 million. Prices dropped earlier after oil ministers from Iran and Saudi Arabia signaled on Tuesday they’re not willing to curtail production.
Encana Corp. soared a record 23 percent as the energy producer cut its annual budget, lowered the dividend and announced another 20 percent reduction in its workforce as it reported a fourth straight quarterly loss, amid tumbling oil and natural gas prices. Shares had tumbled 41 percent this year before the announcement.