Canadian Stocks Fall as U.S. Debt Talks Fail to Yield Agreement
Canadian stocks fell for the first time in five days, led by materials and financial companies, as U.S. lawmakers failed to reach an agreement to raise the country’s debt ceiling.
Research In Motion Ltd. (BB), the maker of the BlackBerry smartphone, fell 4.8 percent after the company said it plans to cut about a tenth of its workforce, or 2,000 jobs. Royal Bank of Canada, the nation’s largest lender, fell 0.8 percent as U.S. Republicans and Democrats prepared rival plans to cut the country’s debt.
The Standard & Poor’s/TSX Composite Index (SPTSX) decreased 58.68 points, or 0.4 percent, to 13,435.95 at 4 p.m. in Toronto.
“That’s creating a bit of uncertainty going into this week,” Youssef Zohny, a portfolio manager at Van Arbor Asset Management Ltd. in Vancouver, said in a phone interview. Van Arbor oversees about C$50 million ($51 million). “We’re not seeing too large a move in the market, so the market seems to be taking those talks in stride. If the U.S. talks become a little more constructive, that could definitely help stocks.”
The S&P/TSX increased 1.8 percent in the previous four sessions to a seven-week high as investors speculated the U.S. would raise the debt ceiling and European leaders agreed on a new bailout for Greece. U.S. Treasury Secretary Timothy F. Geithner has said the government will run out of options to prevent a default on Aug. 2 unless the debt ceiling is increased.
Republican U.S. House Speaker John Boehner’s two-step plan would raise the U.S. borrowing limit by up to $1 trillion and later by $1.6 trillion while requiring larger spending cuts, according to Republican aides.
Democratic Senate Majority Leader Harry Reid’s proposal would cut $2.7 trillion in spending and give President Barack Obama the full $2.4 trillion in additional borrowing authority he seeks, enough to get through the 2012 elections.
Royal Bank of Canada fell 0.8 percent to C$52.82. Toronto-Dominion Bank, Canada’s second-largest lender by assets, declined 0.6 percent to $80.16. Sun Life Financial Inc. (SLF), the country’s third-biggest insurer, fell 1.3 percent to C$27.19.
RIM dropped 4.8 percent to C$25.19. The job cuts will leave the Waterloo, Ontario-based company with about 17,000 employees, RIM said in a statement. Sales have slowed as the company loses market share in the U.S. to competitors like Apple’s iPhone, in part because RIM has not released a new major BlackBerry model since August.
Toronto-based Romarco rose 6.4 percent to C$1.82 after reporting drilling results at its Haile Gold Mine in South Carolina. Kirkland Lake Gold Inc. (KGI) dropped 4.5 percent to C$16. Gold producers in the S&P/TSX declined 1.2 percent, even as gold futures surged to a record.
“Gold companies could be telling us gold is ready for a fall,” Tony Demarin, chief investment officer of BCV Asset Management in Winnipeg, Manitoba said. BCV oversees C$300 million. “The equity investors are signaling that the bullion price has kind of peaked and will start to decline shortly.”
Quadra FNX Mining Ltd. gained 5.5 percent to C$15.89 after the base-metals producer reported its second-quarter production. Teck Resources Ltd. (TCK/B), Canada’s biggest base-metals and coal producer, gained 0.5 percent to C$50.22. First Uranium Corp. fell 1.7 percent to 58 Canadian cents after the company said in a statement that the South African National Nuclear Regulator ordered a halt to the depositing of material at mine-waste storage facilities.
Imax Corp. (IMAX), the operator of large-screen movie theaters, fell 13 percent to C$23.60. The Mississauga, Ontario-based company had its U.S. share-price estimate reduced to $27 from $32 at Stifel Nicolaus & Co., which said earnings expectations for the second half are “too optimistic.”
Bombardier Inc. (BBD/B) fell 2.9 percent to $5.94 after two trains were involved in a fatal high-speed rail crash in China. One of the trains was built by a Bombardier venture with CSR Corp. Bombardier’s Beijing-based spokeswoman Flora Long said she was unable to comment because she was traveling. Calls to the Canadian company’s office in the city went unanswered.
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