Canadian Stocks Fall as Oil Producers Decline on Growth Concern; RIM Drops
Canadian stocks fell for a fifth day as commodity producers sent the main stock index to its biggest weekly loss in almost 10 months on concern Europe’s debt crisis will derail the global recovery.
Suncor Energy Inc., Canada’s largest oil and gas company, lost 1.4 percent as crude oil futures retreated almost $2 a barrel. BlackBerry maker Research In Motion Ltd. dropped 3.8 percent after an International Data Corp. report said the company lost market share. Kinross Gold Corp., Canada’s third- largest gold producer, decreased 3.4 percent as gold stocks fell the most in six weeks.
The Standard & Poor’s/TSX Composite Index retreated 150 points, or 1.3 percent, to 11,692.43 to reach its biggest weekly loss since July. The index last fell five times in a week in June 2006.
“The hopes for this bouncy little recovery in the economy that the government spending stimulated is now being second guessed,” said Danielle Park, who helps manage C$200 million ($191 million) as a money manager at Venable Park Investment Counsel Inc. in Barrie, Ontario. “People are saying, ‘If governments can’t pump in the money, how are we going to restimulate the economy?’ It’s like a virus, and it’s all throughout the world.”
The S&P/TSX slumped 4.2 percent this week, erasing the index’s gains for the year, on concern Europe’s debt crisis may spread from Greece to other countries. Greek bond yields have soared to 18.3 percent for two-year government notes, and yields of Portuguese, Spanish and Irish bonds have also gained, indicating investor concern that the risk of those investments has increased.
Oil, Gas Stocks
The S&P/TSX Energy Index sank 1.2 percent as crude oil completed its biggest weekly decline since December 2008.
“Oil went up an incredible amount in the last several months,” Park said. “Cheap money, speculation, proprietary trading, it was all about hot money trying to find a quick buck. So now you see that unravels.”
Suncor fell 1.4 percent to C$31.92. Cenovus Energy Inc., the oil company spun off from EnCana Corp. in December, dropped 1.5 percent to C$27.49.
Canadian Natural Resources Ltd., the country’s second- biggest energy company by market value, lost 1 percent to C$72. The company declined as much as 3.7 percent after reporting quarterly cash flow below the average analyst estimate, then rebounded after upgrades from analysts at Toronto-Dominion Bank and Cormark Securities Inc.
Market Share Falls
RIM retreated for a fifth day, decreasing 3.8 percent to C$67.83. Market-research firm IDC said RIM’s share of the global smartphone market fell to 19.4 percent from 20.9 percent from a year ago, while iPhone maker Apple Inc.’s share climbed to 16.1 percent from 10.9 percent.
S&P/TSX gold stocks declined 2.6 percent after soaring 15 percent from April 20 to yesterday as investors sought a haven from sovereign debt risk.
“In the end, when there is massive risk aversion and margin clerks are in charge, everything gets sold,” Park said. “It doesn’t matter what kind of shares it is, it all goes down.”
Barrick Gold Corp., the world’s largest producer of the metal, fell 3.1 percent to C$44.70. Kinross decreased 3.4 percent to C$18.11.
Golden Star Resources Ltd., which mines gold in Africa, led the S&P/TSX with an 8.9 percent plunge to C$4.19 after reporting first-quarter profit of 2 cents a share, excluding certain items, compared with the average analyst estimate of 6 cents a share.
Canadian financial shares retreated for a fourth day after yesterday’s almost 1,000-point intraday plunge in the Dow Jones Industrial Average, exacerbated by waves of computerized transactions, shook confidence in the integrity of American equity trading systems.
Royal Bank of Canada, the country’s largest bank, slipped 1.1 percent to C$58.92. TD, its biggest domestic rival, fell 0.5 percent to C$71.92. Manulife Financial Corp., the country’s biggest insurer, fell 0.7 percent to C$18.13.
Brookfield Asset Management Inc., North America’s largest publicly traded real estate company, rallied 2.5 percent to C$25.68. Simon Property Group Inc., which was battling a group led by Brookfield for control of bankrupt U.S. mall owner General Growth Properties Inc., withdrew its offer for General Growth.
DragonWave Inc., which develops wireless communications equipment, tumbled 24 percent, the most in two years, to C$6.27. The company reported fourth-quarter earnings that missed the average of 12 analyst estimates by 4.4 percent, excluding certain items. It also provided a first-quarter revenue forecast below all eight analyst estimates in a Bloomberg survey.