Canada Stocks Edge Lower as Drop in Gold Offsets Energy Strength

  • Precious metal falls for 7th time in 8 days on Fed speculation
  • Canadian trading resumes after Thanksgiving holiday on Monday

Tuesday's Stock Market Movers

Canadian stocks ended the day lower, extending a three-day slide, as a rally in energy companies stoked by crude trading near a 15-month high was offset by declines among raw-materials producers amid slumping gold prices.

The S&P/TSX Composite Index fell 0.1 percent to 14,549.60 at 4 p.m. in Toronto. Canadian markets were closed Monday for the Thanksgiving holiday. The index is up 12 percent this year, making it the third-best performing developed market equity index in the world behind the U.K. and New Zealand.

Raw-materials producers fell 0.6 percent as gold traded near the lowest in four months. The precious metal fell for the seventh time in eight sessions and has tumbled 4.8 percent in October. Barrick Gold Corp. and Franco-Nevada Corp. lost more than 1.7 percent.

Traders have now priced in a 67 percent chance the Federal Reserve will increase interest rates in December, according to data compiled by Bloomberg. Gold is less attractive in an environment of rising rates because it doesn’t pay a yield.

Meanwhile oil and gas companies added 0.6 percent, one of only two industries among 11 to advance in the S&P/TSX. Crude traded just under $51 a barrel in New York, after climbing 3.1 percent Monday. Russia’s biggest producer, Rosneft PJSC, said it won’t reduce output, according to Reuters, increasing uncertainty over whether the country will join OPEC’s deal to curb supply and balance the market. Suncor Energy Inc. rose 7.3 percent and Cenovus Energy Inc. added 2.7 percent.

Raw-materials and energy remain the top-performing industries in Canada this year, fueling a rebound in the wider gauge even as its first-half resurgence has sputtered somewhat in the second. The S&P/TSX Materials Index is up 35 percent and set to halt its longest yearly losing streak since 1988. Energy producers are second with a 26 percent gain.

Canadian stock valuations remain 15 percent higher than their U.S. peers, with the S&P/TSX carrying a price-to-earnings ratio of 23.2 compared with 20.1 for the the S&P 500 Index, according to data compiled by Bloomberg.

Teck Resources Ltd. jumped 4.4 percent, the most in two weeks, for a second day of gains. A potential benchmark settlement between Peabody Energy Corp. and Nippon Steel & Sumitomo Metal Corp. at $200 per metric ton may be a “meaningful positive” for metallurgical coal producers, according to FBR Capital Markets analyst Lucas Pipes.

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