Canada Stocks Fall Most in Two Months as Resources Pace Declines

  • Royal Bank quarterly results exceed estimates, raises dividend
  • Gold futures tumble while investors seek clarity on Fed plans

Canadian stocks tumbled the most in almost two months, as commodities producers sold off with metals prices and crude oil.

The S&P/TSX Composite Index fell 0.9 percent to 14,626.24 at 4 p.m. in Toronto, its first decline in three days. Trading volume was 4.6 percent higher than the 30-day average. The S&P/TSX remains the second-best performing developed market in the world behind New Zealand.

Barrick Gold Corp. and Goldcorp Inc. tumbled more than 9.3 percent as raw-materials producers fell 5.8 percent, a fourth-straight decline and the biggest drop in more than three months. Kinross Gold Corp. sank 11 percent, to the lowest close since April.

Gold futures in New York lost 1.2 percent for the biggest drop in two weeks as investors await more clarity from the Federal Reserve on its intentions for interest-rate moves this year. Fed Chair Janet Yellen is set to speak Friday at an annual symposium in Jackson Hole, Wyoming. Traders have priced in 54 percent odds of a U.S. rate increase in December.

Canadian Imperial Bank of Commerce and Toronto-Dominion Bank added at least 0.6 percent to lead financial services stocks higher. The two are set to report results on Thursday. Bank of Nova Scotia, which is on deck for Aug. 30, rose 1.8 percent.

Royal Bank of Canada slipped 0.5 percent, even after third quarter profit jumped 7.5 percent from a year ago. Its City National purchase in the U.S. bolstered wealth management and capital markets earnings surged.

Raw-materials producers have trimmed their climb this year to 47 percent during the current slide, still the top gainers among 10 industries in the S&P/TSX. The group is on track for the first annual advance in six years, an increase that would halt the longest yearly losing streak since 1988. Energy producers have gained 21 percent in the same period, on pace for the strongest in seven years.

That’s boosted the Canadian equity benchmark to a 12 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 23.3 for the S&P/TSX, opening up a 14 percent premium over the S&P 500 Index.

Energy producers tumbled 1.1 percent Wednesday as oil dropped to the lowest in a week after government data showed U.S. crude inventories unexpectedly rose last week. Enbridge Inc. and TransCanada Corp. fell more than 1.3 percent.

Valeant Pharmaceuticals International Inc. lost 2.1 percent, joining a late-day selloff among U.S. drugmakers, spurred by criticism over drug prices, that dragged the S&P 500 Index to its biggest decline in more than two weeks.

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