Canada Stocks Pare Monthly Gain as Bombardier Sinks on Bailout

  • Quebec government to buy 49.5% of troubled CSeries, equity
  • Potash Corp. slumps after cutting profit forecast, production

Canadian stocks slumped, paring the best monthly gain since February, as Bombardier Inc. plunged after receiving a rescue from the Quebec government of as much as $1.3 billion and resource producers sank on the prospect of higher interest rates in America.

While the Canadian benchmark has jumped 3.6 percent in October, that’s the second-worst performance among 24 developed-nation markets in that time, as a gauge of global equities heads for its best month in four years. The rally stalled Thursday after the Federal Reserve signaled it’s still prepared to raise interest rates this year if warranted. That bolstered the U.S. currency and sent commodities tumbling.

In Canada, Bombardier led declines as the jet maker’s tardy and over-budget CSeries program will get an investment from Quebec in exchange for a 49.5 percent stake and as much as 200 million Bombardier shares, the Montreal-based company said Thursday. The company’s $4.9 billion net loss is the third-worst by a Canadian company since the third quarter of 2007, according to data compiled by Bloomberg.

The Standard & Poor’s/TSX Composite Index fell 71.28 points, or 0.5 percent, to 13,791.88 at 4 p.m. in Toronto. The index’s October gain would be its best month since February. It’s down 5.7 percent in 2015.

Bombardier, the second worst-performing stock in the S&P/TSX this year with a 68 percent decline, dropped 15 percent for the biggest decline since Aug. 24. Materials producers fell 3.5 percent as a group as metals from copper to gold retreated.

Potash Corp. of Saskatchewan Inc. lost 3 percent to lead raw-materials producers lower. The world’s largest fertilizer producer by market value cut its full-year profit forecast and shuttering reducing production in response to weaker demand from emerging markets.

Valeant Pharmaceuticals International Inc. tumbled 3.7 percent after CVS Health Corp. said it would remove Valeant partner Philidor RX Services from its network of pharmacies after an audit of its practices.

Barrick Gold Corp. added 1.6 percent to a two-week high after reporting better-than-estimated profit after the market close yesterday. Barrick’s lower costs and higher production helped to mitigate the impact of weak metals prices. Some 150 companies are scheduled to report earnings next week.

Gold stocks have rallied 10 percent in October, on pace for the best performance since January as the prospect of an interest-rate increase from the Fed dimmed during the month amid slowing global economic growth and mixed U.S. data. Gold becomes a less attractive investment when rates rise as the metal doesn’t pay interest.

Revived prospects for an increase in borrowing costs has stalled the best rally in global developed and developing markets since 2011. The odds the Fed, which left interest rates unchanged yesterday, will move on rates in December has now jumped to 50 percent from around 32 percent a week ago, based on futures prices.

Before it's here, it's on the Bloomberg Terminal.