Canadian Stocks Falter as Rally Halted on Oil Slump, China Data

  • Four-day advance in the S&P/TSX was longest advance this year
  • Commodities fall after data on worsening Chinese manufacturing

The rebound in Canadian stocks proved to be short-lived, as the Standard & Poor’s/TSX Composite Index ended a four-day rally amid falling oil prices and renewed concerns about a slowdown in China.

After a month of see-saw trading during January that pushed the S&P/TSX to the top-performing developed market in the world, Canadian equities resumed their slide Monday. The benchmark equity gauge fell 1.2 percent to 12,674.37 at 4 p.m. in Toronto. The index had rallied 8.3 percent in the final trading days of last month, after hitting a two-and-a-half year low on Jan. 20.

Energy producers slumped 3.1 percent for the biggest slump out of 10 groups. Crude prices fell after government data showed industrial activity in China, the world’s biggest energy consumer, dropped in January to a three-year low. A separate report showed manufacturing in the U.S. shrank in January for a fourth consecutive month as businesses cut staffing plans. The U.S. and China are Canada’s two largest trading partners.

The resource-rich S&P/TSX remains closely linked to commodity prices with raw-materials and energy producers making up about 28 percent of the overall gauge. Crude futures in New York slumped, erasing its longest rally of the year after the China report and data compiled by Bloomberg showing OPEC nations pumped 33.11 million barrels a day last month following Indonesia’s readmission to the group.

Royal Bank of Canada and Bank of Nova Scotia lost more than 1.1 percent as financial companies declined. Seven of ten industries in the S&P/TSX retreated.

Gold producers advanced to a three-week high as the metal climbed for a fifth day in six to the highest in almost three months. China’s continued slowdown boosted the appeal of haven assets. Yamana Gold Inc. and Kinross Gold Corp. advanced more than 3.5 percent.

Amaya Inc. surged 20 percent, the biggest gain since June 2014, after the company said Chairman and Chief Executive Officer David Baazov has indicated he intends to make a cash offer for the firm. The potential offer for Amaya, the world’s largest online poker company and owner of PokerStars, values the company at about C$2.8 billion.

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