Canada Stocks Fall, Halt Five-Day Rally as Oil Producers Slip

  • Tahoe Resources jumps on earnings, silver production outlook
  • Mining stocks pace gains this year rallying more than 60%

Canadian stocks fell, snapping a five-day advance as energy producers tumbled with crude and Valeant Pharmaceuticals International Inc. slid, offsetting gains in raw-materials producers spurred by rising gold prices.

The S&P/TSX Composite Index lost 0.2 percent to 14,775.04 at 4 p.m. in Toronto, halting a five-day 2.2 percent rally. Trading volume was 7 percent higher than the 30-day average. The S&P/TSX is the second-best performing developed market in the world, just behind New Zealand.

Energy producers lost 0.6 percent. New York crude fell 2.5 percent to $41.71 a barrel, after U.S. government data today showed stockpiles unexpectedly rose, while gasoline and distillate inventories fell more than estimated.

Meanwhile the health-care group posted the biggest drop on the S&P/TSX, with Valeant falling 3.1 percent a day after rallying the most in two decades. The drugmaker surprised investors yesterday by maintaining its full-year outlook even after posting disappointing revenue and earnings figures. Valeant is also seeking to loosen restrictions on its debt load.

Investors also weighed earnings from Canadian companies. Precious metals producer Tahoe Resources Inc. climbed 5.9 percent, for the biggest increase in six weeks, after posting adjusted earnings ahead of estimates while predicting it will achieve the top end of its 2016 forecast for silver production. Meanwhile, Alamos Gold Inc. slipped 4.7 percent after reporting a loss as second-quarter gold production slipped from year-ago levels.

Gold producers paced a broader gain among raw-materials stocks on the day. Goldcorp Inc. and Detour Gold Corp. rose more than 3.4 percent to pace a 0.8 percent increase in raw-materials as gold and copper prices rose. Mining and materials companies are the top gainers this year among 10 industries in the S&P/TSX with a 65 percent advance, the best year-to-date performance for the category in at least 30 years according to data compiled by Bloomberg.

That’s boosted the Canadian equity benchmark to a 14 percent jump in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 23.5 for the S&P/TSX, about 15 percent higher than the S&P 500 Index.

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