Base Metals Producers Retreat to Lead Canadian Stocks Lower

  • Barclays report says global copper supply will exceed demand
  • Volume in benchmark S&P/TSX is 28% lower than 30-day average

Metals producers Teck Resources Ltd. and First Quantum Minerals Ltd. dropped to lead a decline in commodities companies as Canada’s broader equity benchmark retreated.

The Canadian equity benchmark S&P/TSX Composite Index slipped 0.1 percent to 14,524.61 at 4 p.m. in Toronto, pulling back after Monday when it reached the highest level in a year. Trading volume was 28 percent lower than the 30-day average.

Raw-materials producers dropped 0.8 percent as a group, as First Quantum and Teck retreated at least 4.1 percent. Barclays Plc said in a report that the global supply of copper will likely exceed demand every year through 2020. As a result, no new mines will be needed this decade, the bank concluded.

Suncor Energy Inc. and Imperial Oil Ltd. retreated more than 1.1 percent as energy producers declined 0.4 percent as a group for the fourth decline in five days. Crude closed at the lowest level in more than two months in New York as the dollar rose against its peers and global oil markets were deemed comfortably supplied despite threats to output. U.S. crude supplies remain ample even as government data is projected to show that nationwide stockpiles slipped for a ninth week.

Even with today’s decline, Canada remains the second-best performing developed market in the world this year with a 12 percent advance, trailing only New Zealand. Mining stocks have fueled the resurgence in Canadian equities with a 59 percent increase amid a rebound in gold prices, the best such performance for the group in at least 30 years, according to data compiled by Bloomberg.

Consumer staples and technology shares offset some of the losses by commodity companies today, rising at least 0.8 percent. Alimentation Couche-Tard Inc., a convenience-store operator, capped a two-day gain of 1.6 percent. Open Text Corp. rose the most out of technology stocks to the highest since at least 1998.

Canadian stocks remain more expensive than their U.S. peers, with a price-earnings ratio of 22.4 for the S&P/TSX about 11 percent higher than the S&P 500.

Ballard Power Systems Inc. tumbled 20 percent, the most in more than two years, a day after rallying 44 percent, the most since February 2015, after signing an agreement to build a factory in China to make fuel-cell stacks in a deal worth at least $168 million over five years. The fuel cells would be used in low-pollution buses in China.

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