Canada Stocks Fall Second Day as Lenders, Gold Producers Drop

  • Aritzia surges as much as 19 percent in Toronto trading debut
  • Financials retreat as European banks brace for job cuts

Canadian stocks slipped for a second day as financial-services shares retreated after the group capped the best quarterly performance since 2013, while Aritzia Inc. surged in its trading debut.

The S&P/TSX Composite Index fell 0.3 percent to 14,689.04 at 4 p.m. in Toronto, in the first day of trading in the fourth quarter. The index rose 4.7 percent for the three months since the end of June on Friday for a third quarterly gain, its longest streak in two years. The S&P/TSX is up 13 percent this year, making it the the second-best performing developed market equity index in the world behind New Zealand.

Canadian stock valuations touched highest level in 14 years Friday, and remain more expensive than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.5 compared with 20.3 for the the S&P 500 Index, according to data compiled by Bloomberg.

Raw-materials producers slumped 1.8 percent to lead losses across seven of 11 industries in the S&P/TSX. Goldcorp Inc. tumbled 4.4 percent after halting work at one of its biggest mines amid a labor protest. Oil and gas companies ended the day 0.3 percent higher after crude settled at the highest level in three months to follow up an 8.5 percent rally last week.

Financial services companies dropped 0.2 percent as Royal Bank of Canada lost0.4 percent. The group comprises one-third of the Canadian stock market.

Canadian Finance Minister Bill Morneau introduced a series of new measures to tighten access to mortgage insurance for commercial banks and close a tax loophole on home purchases by foreigners, in an attempt to cool the Vancouver and Toronto real-estate markets without harming other regions.

The banks joined a retreat in financials in Europe and the U.S., with losses coming as British Prime Minister Theresa May pledged to start pulling the U.K. out of the European Union by March. Deutsche Bank AG said it was poised to reach an agreement with labor representatives paving the way for the elimination of 1,000 jobs. The lender has come under pressure as mounting legal costs have prompted some clients to pull funds and investors to question Deutsche Bank’s financial health. Meanwhile banks across Europe are preparing to cut some 20,000 jobs.

Aritzia, the Canadian women’s fashion retailer, jumped 11 percent after raising C$400 million in its initial public offering, the largest in Canada this year. Aritzia was started in 1984 by Brian Hill, who’s the current CEO. The company sells clothes and accessories aimed at women aged 15 to 45 has 75 locations across North America.

Energy and raw-materials producers remain the top-performing industries in Canada this year, fueling a rebound in the wider gauge. The S&P/TSX Materials Index is up 46 percent and set to halt its longest yearly losing streak since 1988, while energy producers are second with a 24 percent gain.

Ritchie Bros. Auctioneers Inc. added 3 percent for a third day of gains, climbing to a record. The company said they conducted their largest-ever two-day auction in the U.S. last week, selling more than $76 million worth of equipment.

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