Canadian stocks fell, snapping a four-day rally, as crude dropped below $30 a barrel and retail sales tumbled the most in more than five years.
The Standard & Poor’s/TSX Composite Index dropped 0.9 per cent to 12,813.42 at 4pm on Friday in Toronto, trimming a climb this week to 3.5 per cent. Canada’s benchmark equity gauge remains the best-performing developed market in the world in 2016 with a 1.5 per cent decline, after being among the worst in the past year. The S&P/TSX slid into a bear market last month as crude prices collapsed due to a global supply glut.
Car dealership operator AutoCanada Inc. dropped 1.9 per cent while auto-parts makers Linamar Corp. and Martinrea International Inc. retreated at least 2 per cent to lead consumer discretionary stocks lower as eight of 10 industries in the S&P/TSX declined.
Canadian retail sales fell 2.2 per cent in December, the fastest since 2010, with the decline exceeding all 20 forecasts in a Bloomberg News survey. Motor vehicle and parts sales fell 3.9 per cent, including a 6.7 per cent drop in a category that includes snowmobiles.
Encana Corp. tumbled 11 per cent as energy producers fell 1.3 per cent for a second day of losses. New York crude returned to levels below $30 a barrel. U.S. crude supplies expanded to the highest level in more than eight decades, according to government data Thursday.
Encana, along with Cenovus Energy Inc., had its debt ratings lowered to junk by Moody’s Investors Service as the prolonged price rout has sapped cash flows. Cenovus lost 2.9 per cent.
Valeant Pharmaceuticals International Inc. sank 9.6 per cent, the biggest decline this year. David Maris, analyst at Wells Fargo Securities, said there are many “unanswered questions” about the company’s strategic direction and forecast as he initiated coverage of the stock with an underperform, the equivalent of a sell.
Valeant, briefly the largest company in the S&P/TSX by market capitalization last year, has slumped 66 per cent from an August high amid intense scrutiny from investors and lawmakers surrounding its pricing practices.
Dream Office REIT surged 13 per cent, the most since 2008, after saying yesterday it plans to sell about C$1.2 billion in assets in the next three years, and it cut its annualized distribution by 33 per cent. The stock was also raised to an “action list buy” from “buy” at TD Securities.