Canada Stocks Fall Second Day as Oil Drops From 10-Month High

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  • Global markets decline amid cloudy global growth outlook
  • Eight of 10 groups in S&P/TSX retreats, as energy leads drop

Canadian stocks fell a second day, as energy producers retreated with the price of oil amid uncertainty over the course of central bank policy and global growth.

The S&P/TSX Composite Index fell 0.5 percent to 14,240.02 at 4 p.m. in Toronto, after touching the highest level in 10 months earlier this week. The index is up 20 percent from its Jan. 20 low, after climbing out of a bear market on Friday. Trading volume today was about 13 percent below the 30-day average.

Global stocks declined on Thursday, with the MSCI All-Country World Index retreating for the first time in six days. U.S. jobless claims unexpectedly fell last week, while the outlook for global growth remains clouded with uncertainty over when exactly the Federal Reserve will raise rates, the coming Brexit vote and potential volatility stemming from the U.S. election.

Energy producers led declines, as eight of 10 industries in the Canadian equity benchmark retreated. Crescent Point Energy Corp. and Encana Corp. lost at least 1.5 percent. Crude futures dipped below $51 a barrel in New York. Oil has recovered more than 90 percent from a 12-year low in February, driving a resurgence in energy stocks this year.

Performance Sports Group Ltd. dropped 8.8 percent, for the steepest decline in almost two months. The sports equipment maker is now forecasting an adjusted earnings loss for fiscal 2016, after previously predicting profit of 12 to 14 cents a share.

BRP Inc. jumped 7.4 percent to the highest level this year. The Ski-Doo snowmobile maker boosted its profit forecast for the year to a range from C$1.79 to C$1.89, after previously seeing between C$1.75 and C$1.85.

Canadian equities are up 9.5 percent this year, within striking distance of beating New Zealand’s S&P/NZX 50 Index as the top performer in 2016 among 24 developed nations. It’s a stark contrast to 2015 when the S&P/TSX tumbled by 11 percent as one of the world’s worst equity markets. Raw-materials producers have boosted the broader rally this year, soaring 46 percent for the best year-to-date performance in three decades.

Canadian shares remain more expensive relative to their U.S. peers. The S&P/TSX now trades at 21.8 times earnings, about 11 percent higher than the 19.6 times valuation of the S&P 500 Index.