Tags: Canada | Stock | Bank | Energy

Canada's Stock Market Plunges on Bank Disappointment, Energy Woes

Thursday, 04 Dec 2014 05:18 PM

Canadian stocks fell the most in more than a year as the nation’s biggest banks posted results that missed estimates and energy shares resumed a selloff with the price of crude.

Toronto-Dominion Bank, the country’s largest lender by assets, tumbled the most in more than five years after posting fourth-quarter profit short of estimates. Energy stocks tumbled 2.1 percent as a group as oil fell. Canadian Oil Sands Ltd. sank 16 percent to a decade low after slashing its dividend. Enbridge Inc. jumped 10 percent to a record on plans to transfer C$17 billion ($14.9 billion) in assets to a fund.

The Standard & Poor’s/TSX Composite Index slumped 284.11 points, or 1.9 percent, to 14,469.95 in Toronto on Thursday, the biggest drop since June 2013. The equities benchmark pared its gain to 6.2 percent this year.

“We had crabby investors who woke up on the wrong side of the bed this morning and were in a fighting mood and wanted to sell,” said Barry Schwartz, fund manager at Baskin Wealth Management in Toronto. He helps manage C$740 million with the firm. “The Canadian banks had a great year, but the people wanted more. There’s a lot of people out there who saw how poorly their energy stocks have done and want to rip off the heads of their advisers.”

All of the 10 industries in the S&P/TSX dropped at least 0.6 percent on trading volume 45 percent higher than the 30-day average Thursday. Global equities slumped after the European Central Bank said policy makers will reassess stimulus next quarter, damping hopes for additional bond purchases this year.

Bank Earnings

Financial stocks, the largest group by weighting, sank 2.2 percent, the most in the benchmark Canadian equity gauge. Toronto-Dominion fell 5.1 percent to C$54.03, the biggest decline since April 2009.

Canadian Imperial Bank of Commerce lost 3.4 percent to C$103.52, the worst drop since September 2011, as fourth-quarter profit declined 1.7 percent amid weakness in its wholesale banking and Canadian lending businesses.

“Bank earnings came in with a disappointment, and it’s putting pressure on the index,” said Youssef Zohny, portfolio manager at StennerZohny Investment Partners of Richardson GMP Ltd. in Vancouver. Richardson GMP manages about C$29.3 billion. “The thing that’s moving markets Thursday from a macro perspective is the ECB meeting. Bottom line, the markets were expecting more.”

Draghi Holds

Mario Draghi, president of the ECB, left interest rates unchanged, unveiled “substantially” lower forecasts for inflation and growth in the euro area and said the central bank will reassess the effects of existing monetary stimulus in early 2015.

Raw-materials and energy shares, which together make up about a third of the broader index, each slumped 2.1 percent as gold and crude prices slipped.

Canadian Oil Sands retreated 16 percent to C$10.97, the lowest since September 2004, after cutting its quarterly dividend 42 percent to 20 Canadian cents a share.

Gildan Activewear Inc., the wholesale apparel manufacturer, slumped 9.2 percent to C$60.22, the biggest retreat since December 2011. Revenue of $666 million fell short of the company’s most recent projection of $700 million due to issues including weak market demand and inventory destocking, the company said.

Enbridge surged 10 percent to C$60.04, a record, as the pipeline operator unveiled a plan to transfer its Canadian liquids pipelines to the Enbridge Income Fund. The company is also considering a similar move for its U.S. liquids pipelines assets and boosted its dividend.

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Canadian stocks fell the most in more than a year Thursday as the nation's biggest banks posted results that missed estimates and energy shares resumed a selloff with the price of crude.
Canada, Stock, Bank, Energy
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2014-18-04
Thursday, 04 Dec 2014 05:18 PM
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