Canadian Stocks Fall to Pare Weekly Gain as Financials, Oil Drop

  • Jump in U.S. retail sales boosts Fed rate hike speculation
  • Buyout firm Onex posts first-quarter loss wider than expected

Canadian stocks fell, clawing back a weekly gain, as financial shares and energy producers declined with the price of crude, after U.S. retail data jumped the most in a year and spurred bets on higher interest rates.

The benchmark S&P/TSX Composite Index lost 0.3 percent to 13,748.58 at 4 p.m. in Toronto, paring a weekly gain to 0.3 percent. Volume today in the benchmark was 9.9 percent lower than the 30-day average. The gauge now trades at 20.8 times earnings, about 9.5 percent higher than the 19 times valuation of the S&P 500, data compiled by Bloomberg show.

U.S. consumer purchases jumped 1.3 percent in April, the most since March 2015, providing the Federal Reserve with more confidence that higher interest rates won’t disrupt growth. The U.S. is Canada’s largest trading partner.

Crude futures dropped 1.1 percent in New York to $46.21. Investors weighed the return of output from Canadian oil-sands producers after the Alberta wildfires against supply reductions from the U.S. to Nigeria. Militant attacks have cut output in Nigeria to the lowest in 20 years.

Investors also weighed disappointing earnings results. Financial services stocks slipped 0.5 percent, led by a 0.9 percent decrease in Manulife Financial Corp. Onex Corp., Canada’s largest buyout firm, tumbled 5.4 percent, the most since 2011, after reporting a wider first-quarter loss than analysts had forecast.

Hudson’s Bay Co. sank 7 percent to a record low after reporting same-store sales results for its first quarter, ahead of full financial results on June 9. Eliminating foreign exchange swings, same-store sales decreased 1 percent, including a 5.7 percent drop at its Saks Fifth Avenue unit.

Meanwhile Kinross Gold Corp. and Eldorado Gold Corp. maintained gains as raw-materials producers advanced.

Concordia Healthcare Corp. surged 15 percent after the drugmaker confirmed it is working with Greenhill & Co. considering strategic options for the company. Concordia earlier reported first-quarter earnings short of estimates. The stock has slumped 40 percent this year, among the worst-performing in the S&P/TSX this year.

Canadian Tire Corp. lost 2.9 percent after analysts at Credit Suisse Group AG lowered their rating for the stock to the equivalent of a sell, as the stock has become expensive. The retailer has jumped 19 percent this year, trading at a record Thursday after posting first-quarter earnings ahead of expectations.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE