Canada Stocks Fall to Lowest in 3 Weeks as Energy Shares Retreat

Updated on
  • S&P/TSX catches up with crude’s slide into bear market
  • Silver Wheaton climbs to highest since 2012 on gold deal

Canadian stocks fell in their first day of trading in August, sliding the most since the aftermath of the U.K. secession vote, as energy producers tumbled after crude prices dropped Monday into a bear market.

The S&P/TSX Composite Index fell 0.7 percent to 14,477.01 at 4 p.m. in Toronto, to the lowest level in three weeks after capping its best month since July. Trading volume Tuesday was 9.3 percent higher than the 30-day average. Equity markets were closed on Monday for a holiday.

Energy companies sank 1.7 percent as a group as eight of 10 industries in the S&P/TSX retreated. Suncor Energy Inc. and Cenovus Energy Inc. fell more than 3.1 percent to lead producers lower. Crude futures settled at the lowest level in almost four months, falling below $40 a barrel to cap a decline of more than 20 percent from a June high.

Royal Bank of Canada and Bank of Nova Scotia retreated at least 1 percent to lead the nation’s largest lenders lower. Canada is in the midst of one of its weakest expansions ever, with growth almost entirely dependent on bank lending and the hot Toronto and Vancouver housing markets, according to Statistics Canada data. Canada’s gross domestic product contracted at the fastest pace in more than seven years, data showed Friday.

Valeant Pharmaceuticals International Inc. fell 4.6 percent for a third day of losses, dropping to the lowest level in almost a month. The drugmaker is expected to lower earnings forecasts, according to analysts at Morgan Stanley. Smaller peer Concordia International Corp. sank 17 percent, to the lowest close since April 2014, with CIBC World Markets analyst Prakash Gowd ’skeptical’ Concordia will be able to seal the deal on its exploration of strategic options.

The Canadian benchmark is hanging onto an 11 percent gain in 2016, rebounding from a slump last year that was the worst for the S&P/TSX since the 2008 financial crisis. The rally has made Canadian stocks more expensive than their U.S. peers, with a price-earnings ratio of 22.9 for the S&P/TSX, about 13 percent higher than the S&P 500 Index.

Mining and energy stocks have propelled Canada to the second-best performance among developed markets this year, trailing only New Zealand fueled by a rally in commodities prices from gold and crude to base metals.

Silver Wheaton Corp. climbed 5.1 percent to the highest level since November 2012 after agreeing to spend $800 million to increase its share of gold production from a Vale SA copper and gold mine in Brazil. The company will get 25 percent of the mine’s gold production, adding to the 50 percent it already gets. Silver Wheaton estimates the mine to have a 50-year life.

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