Canada Stocks Fall With Global Markets Amid Bank Uncertainty

Updated on
  • Financials slide with slow inflation and weakness in banks
  • Consumer shares decline as confidence wanes on economy outlook

Canadian stocks declined a second day, tracking losses in U.S. shares spurred by weakness in banks, while investors prepare for the U.S. presidential debate and a meeting between major oil producers this week.

Ten of 11 main groups in the Canadian benchmark index retreated, with bank shares contributing the most to losses as concern mounted that Deutsche Bank AG’s slump could destabilize the European banking sector. Consumer shares slid as household confidence fell after views of the country’s economic prospects hit the lowest in six months. Energy shares declined despite crude gains ahead of an OPEC meeting.

The S&P/TSX Composite Index fell 0.5 percent to 14,619.46 at 4 p.m. in New York, paring its advance this quarter to 4 percent. The measure has gained 12 percent this year, second-most among developed markets tracked by Bloomberg. The rally has pushed the price-to-earnings ratio for stocks in the index to 23.3 times reported profit, about 15 percent higher than the valuation for S&P 500 Index shares.

Monday’s slump was attributable to financial-service firms, which lost 0.6 percent amid a global selloff in banks. The Royal Bank of Canada and Toronto-Dominion Bank fell 0.6 percent. Canada’s lenders and insurers, which account for one-third of the S&P/TSX by weighting, took an extra hit from data showing the nation’s core inflation rate was the slowest in two years in August. That spurred bets the economy may need added monetary stimulus, with any lower rates crimping profits at financial institutions.

Shares of consumer stocks fell at least 1 percent amid the confidence data. Loblaw Cos. and Cott Corp. plunged more than 1.6 percent to pace declines.

Energy producers declined 0.4 percent, even as crude surged in New York after Saudi Arabia offered to cut output, signaling the possibility for a future OPEC deal. TransCanada Corp. declined 1 percent, after the company agreed to buy all outstanding units of Columbia Pipeline Partners LP for about $848 million in cash.

Raw-materials producers lost 0.5 percent as spot gold declined. Barrick Gold Corp. fell 0.5 percent.