- Gold price has lost $100 this month as Fed talks rate hikes
- Delphi Energy drops most since 2008 after bank line cut
Canadian stocks fell, retreating from the highest level since August, as commodities producers declined with gold in a light trading day with U.S. and U.K. markets closed for a holiday.
The S&P/TSX Composite Index fell 0.1 percent to 14,086.67 at 4 p.m. in Toronto, after rallying the most in five weeks last week with a 1.3 percent gain. The index has surged 19 percent since reaching a two-year low on Jan. 20 and is up more than 8 percent this year, the second most after New Zealand among developed-market nations tracked by Bloomberg. Trading volume was 70 percent lower than the 30-day average.
The recent rally has made Canadian shares expensive relative to their U.S. peers. The S&P/TSX now trades at 21.4 times earnings, about 10 percent higher than the 19.4 times valuation of the S&P 500.
Global stocks were little changed after a four-day rally. The Bloomberg Dollar Spot Index rose, trading at its highest level since March, after Federal Reserve Chair Janet Yellen’s comments May 27 pointed to a likely interest-rate increase in coming months. Traders have now priced in a 34 percent chance of an interest rate increase in June, and better-than-even odds for July, according to data compiled by Bloomberg.
In Canada, Bank of Nova Scotia slipped 0.1 percent as a gauge of the nation’s largest lenders ended the day little changed after a five-day rally, trading near the highest level since December 2014. Scotiabank, Canada’s third-largest lender, is set to report second-quarter earnings Tuesday. Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce posted better-than-expected results last week.
Barrick Gold Corp. and Tahoe Resources Inc. lost more than 0.6 percent as raw-materials producers slipped 0.4 percent as a group. Suncor Energy Inc. rose 0.3 percent after the oil-sands producer restarted operations near Fort McMurray. Operators in the area took offline more than 1 million barrels a day of output as wildfires devastated the region. Enbridge Inc. declined 1.2 percent. Raw-materials and energy producers led declines among four of 10 industries in the S&P/TSX.
Delphi Energy Corp. plunged 19 percent, the most in more than seven years, after lenders cut the oil and gas producer’s credit facility for the second time since December amid the rout in crude prices.
Commodities producers, which make up about a third of the S&P/TSX by market capitalization, have fueled the rally in Canadian stocks this year. Resource prices are coming under pressure as the Fed’s April meeting minutes increased speculation an interest-rate hike could come as soon as June, driving the dollar higher and commodity prices lower.
Intertain Group Ltd. climbed 5.1 percent for a second day of gains, trading at the highest level this year, after the online gaming company delayed its annual meeting by as long as three months, to no later than Sept. 23. The postponement gives the company’s special committee more time to complete a strategic review. Intertain will provide an update by the end of June.