- Drugmaker tumbles most on record on weaker profit outlook
- Commodities producers reverse losses to pare S&P/TSX declines
Canadian stocks fell a second day as Valeant Pharmaceuticals International Inc. tumbled the most on record after giving its sales forecast missed estimates and the company warned it risked violating its debt terms.
The Standard & Poor’s/TSX Composite Index declined 0.6 percent to 13,400.31 at 4 p.m. in Toronto, paring earlier losses of as much as 1.4 percent in afternoon trading as commodities producers reversed losses. The resurgent S&P/TSX is one of the best-performing developed markets in the world this year, vying with New Zealand for the top spot, while posting returns ahead of the U.S., Germany and U.K.
Rallies among energy and materials producers have led to the annual gain, and shares in the benchmark S&P/TSX now trade at about 21.3 times earnings, roughly 17 percent more expensive than the valuation of the benchmark U.S. equity index, the Standard & Poor’s 500 Index, data compiled by Bloomberg show.
The rally paused Tuesday almost entirely because of a 51 percent rout in Valeant. The stock took 118 points off the index, which would have advanced if the drugmaker weren’t included. The Quebec-based company cut its 2016 forecast, reported a weak fourth quarter and said it risked breaching some of its debt agreements if it can’t file its annual report in time.
Valeant, briefly the largest company in Canada by market capitalization last year, has lost more than three-quarters of its value from an August peak as regulators and investors have scrutinized its business practices. The company has also had to grapple with an extended medical leave from Chief Executive Officer Michael Pearson, who only returned recently, while pulling its financial guidance and delaying fourth-quarter results.
Canadian shares joined a slump in global equities as investors were reminded that raw-material prices remain volatile amid uncertainty persists over stimulus efforts in Europe and economic growth in China. Oil dropped a second day as Russia signaled Iran won’t join major producers in freezing output to reduce a global glut.
Energy producers rose 0.4 percent, rebounding from an intraday loss in the final hour of trading. Oil settled 2.3 percent lower in New York as Iran has “reasonable arguments” for not joining an alliance to cap output now, Russian Energy Minister Alexander Novak said after meeting with his Iranian counterpart.
First Quantum Minerals Ltd. and Teck Resources Ltd. tumbled at least 4.4 percent as iron ore dropped a sixth day, reversing gains from a record spike, and copper led other base metals lower.