Canada Stocks Little Changed as Minutes Signal Fed in No Rush

  • July minutes show officials debate whether hike needed soon
  • Gold, copper prices tumble as dollar rebounds against peers

Canadian stocks ended little changed after all but erasing earlier losses following Federal Reserve meeting minutes that signaled the U.S. central bank won’t rush to raise interest rates amid uneven economic growth. Valeant Pharmaceuticals International Inc. surged.

The S&P/TSX Composite Index lost less than 0.1 percent to 14,697.60 at 4 p.m. in Toronto, rebounding from an earlier decline of as much as 0.6 percent. Commodities producers led declines as the dollar’s advance weighed on prices for natural resources. Trading volume was 3.6 percent lower than the 30-day average.

U.S. equities ended higher while the dollar rebounded from a more than three-month low against major peers. Traders priced in a less than 50 percent chance of a rate move this year, according to data compiled by Bloomberg, down from earlier in the week after Fed officials from New York and Atlanta surprised markets with comments suggesting the central bank may raise borrowing costs as soon as next month.

Minutes of the central bank’s July meeting issued Wednesday showed some officials preferred to wait on a rate hike because inflation remained benign, while others wanted to raise soon as the labor market nears full employment. The Canadian dollar recovered losses against the greenback after the release, extending an eight-day rally that’s now the longest in five years.

In Canada, commodities producers led declines as four of 10 industries in the S&P/TSX retreated. Raw-materials producers slumped 1.2 percent for a fifth day of losses, the longest losing streak since October, as gold and copper fell in tandem. Yamana Gold Inc. and Barrick Gold Corp. retreated at least 2.2 percent. Energy stocks dropped 0.5 percent.

The declines have pared gains for raw-materials producers to 60 percent, still the top gainers this year among 10 industries in the S&P/TSX, the best year-to-date performance for the category in at least 30 years according to data compiled by Bloomberg.

That’s boosted the Canadian equity benchmark to a 13 percent jump 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 23.4 for the S&P/TSX, about 14 percent higher than the S&P 500 Index.

Valeant Pharmaceuticals jumped 13 percent, to the highest in two months, after Morgan Stanley analyst David Risinger raised his rating for the drugmaker to overweight from equal weight and boosted his price target on a “clearer vision” for the company under new CEO Joe Papa. It’s the second analyst rating increase this week for Valeant, which now has seven buys, 11 holds and four sells according to data compiled by Bloomberg.

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