Canada Stocks Little Changed as Banks Offset Commodity Producers

  • IEA says oil oversupply to almost vanish in second half of '16
  • Agrium slumps to 2014 low after Scotiabank analyst cuts rating

Canadian stocks ended little changed, halting a four-day rally, as the Standard & Poor’s/TSX Composite Index traded near a five-month high.

The benchmark equity gauge fell less than 0.1 percent to 13,668.29 at 4 p.m. in Toronto, following a four-day winning streak that pushed the index 3.1 percent higher. The S&P/TSX remains one of the best-performing developed markets in the world this year with a 5.1 percent gain.

West Texas Intermediate crude slipped ahead of a key meeting this weekend between OPEC producers on a potential output freeze. The International Energy Agency predicted in a report global oil markets will “move close to balance” in the second half of the year. Oil prices have rebounded from 12-year lows in the past two months.

The resource-dominant S&P/TSX remains tied to commodities prices, as a rebound in resource producers through the first quarter has fueled a 15 percent resurgence for the S&P/TSX from a 2013 low on Jan. 20. The Canadian benchmark now trades at 21.7 times earnings, about 15 percent higher than the 19 times earnings valuation of the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Gold producers sank 2.7 percent as spot prices of the precious metal retreated a third day. Demand for bullion as a haven has slowed as stock markets rallied and growth indicators suggested China’s economy was stabilizing. Raw-material producers remain the top-performing industry in Canada this year, rallying 24 percent. 

Fertilizer producer Agrium Inc. tumbled 5.3 percent to a 2014 low after Bank of Nova Scotia analyst Ben Isaacson dropped Agrium from his focus list due to its valuation. Isaacson now has a sector outperform rating for Agrium, or buy, albeit with less conviction due to lower nitrogen prices and a weaker agricultural outlook beyond 2016, according to a note.

Shaw Communications Inc. fell 3.2 percent, the most since January, after reporting second-quarter earnings. Barclays Capital Analyst Phillip Huang said in a note Shaw will need years of investments to grow its recently acquired Wind Mobile asset, adding to a long list of investment priorities that will constrain the company’s ability to raise its dividend in the foreseeable future.

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