Canada Stocks Fall a Fourth Day as Banks Slide on Brexit Risk

  • S&P/TSX 60 volatility gauge climbs to highest since May 9
  • Penn West Petroleum jumps most since 1992 after asset sales

Canadian stocks fell a fourth day, the longest stretch of losses in two months, as global markets retreated on rising anxiety the U.K. will vote to exit the European Union.

The S&P/TSX Composite Index fell 0.3 percent to 13,993.88 at 4 p.m. in Toronto. The index has lost 2.6 percent over four days, the biggest drop over that stretch of time since Feb. 11. Trading volume today was in line with the 30-day average.

Global stocks sank a third day. The outlook for global growth remains clouded with uncertainty over when the Federal Reserve will raise rates, the coming Brexit vote and potential volatility stemming from the U.S. election.

In Canada, the big banks declined at least 0.7 percent with Bank of Nova Scotia and Royal Bank of Canada retreating. Gold producers added 0.8 percent as investors flocked to the precious metal as a store of value.

A volatility index of S&P/TSX 60 options jumped 12 percent to 18.02, the highest in a month. The gauge has soared 48 percent in four sessions, the biggest increase since August. The S&P/TSX 60 Index is a gauge of the 60 largest, most liquid shares in Canada.

Canadian equities are still up 7.6 percent this year, trailing only New Zealand 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 45 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 21.5 times earnings, about 12 percent higher than the 19.2 times valuation of the S&P 500 Index.

Penn West Petroleum Ltd. jumped 39 percent, the most since 1992, after the oil and gas explorer agreed to sell all of its Saskatchewan assets for C$975 million in cash to Teine Energy Ltd. Including other assets in Alberta, Penn West will raise C$1.1 billion, with the company now expecting to be “comfortably in compliance” with its financial covenants at the end of the second quarter and the remainder of the year.

Turquoise Hill Resources Ltd. surged 13 percent, the most in three years, after parent Rio Tinto Group was reported to hire Goldman Sachs Group Inc. to help privatize its copper unit. Rio Tinto is seeking to increase its stake in Turquoise Hill while selling the remaining shares in the company to a strategic buyer, according to the Sunday Times, without saying where it got the information.

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