Canadian stocks fell a second day, poised for the biggest slide in almost three months and joining a retreat in equities worldwide spurred by sluggish economic data.
The benchmark S&P/TSX Composite Index sank 1.6 percent to 13,648.06 at 10:08 a.m. in Toronto, headed for the steepest drop since Feb. 9. The S&P/TSX posted a third consecutive weekly advance last week and remains one of the best-performing developed markets in the world this year. The gauge now trades at 21.2 times earnings, about 11 percent higher than the 19.1 times earnings valuation of the Standard & Poor’s 500 Index, data compiled by Bloomberg show.
Canadian Western Bank, the Edmonton-based lender, plunged 10 percent for the biggest slide in seven years after saying it would take about C$33 million ($26 million) in provisions for soured oil-and-gas loans in the second quarter, prompting one analyst to downgrade the stock. Financial shares contributed the biggest losses out of 10 S&P/TSX groups.
Encana Corp. sank 10 percent after reporting a first-quarter loss that was wider than expected, as energy producers posted the biggest drop. All but one industry in the S&P/TSX fell with trading volume 29 percent higher than the 30-day average at this time of the day.
Encana said its first-quarter operating loss was 15 cents a share compared with estimates for 12 cents, as cash flow sank 73 percent from the previous quarter. The company blamed the decline in energy prices, lower realized hedging gains, reduced liquids volumes and a one-time restructuring charge.
Commodities prices from copper to crude fell after data showed a private gauge of Chinese manufacturing slipped in April. A Markit gauge for U.K. manufacturing also showed contraction, unexpectedly shrinking for the first time in three years in April. Stocks fell in the U.S. and Europe, while the dollar rose from a one-year low as Federal Reserve Bank of Atlanta President Dennis Lockhart called a June interest-rate hike “a real option.”
Crude futures traded below $45 a barrel in New York ahead of weekly U.S. government data forecast to show rising stockpiles. Inventories increased by 500,000 barrels last week, according to the median estimate of a Bloomberg survey ahead of the report Wednesday.
The resource-dominant S&P/TSX has sputtered to start the month of May, with commodities producers giving back some gains amid the uncertain outlook for global growth and speculation higher interest rates at the Fed will boost the dollar’s value. Raw-materials and energy producers are still the two top-performing industries in Canada so far this year.