Canadian stocks slide on weak earnings, lower commodity prices
Canadian shares fell for second day on Wednesday as investors were discouraged by dismal results from Cenovus Energy Inc. and Canadian Pacific Railway Ltd. and amid falling metal and oil prices.
The resource-heavy Standard & Poor’s/TSX Composite Index (TSE:OSPTX) slipped 0.2 percent to 12,714.57 at 12:28 p.m. on Wednesday. Two shares declined for every stock that gained.
The materials sub-index, which includes mining shares, shed 2 percent as gold fell for a second straight day. Goldcorp Inc. (TSE:G) surrendered 2.6 percent to C$29.88. Barrick Gold Corp. (TSE:ABX) fell 4 percent to C$17.92 after expecting to take a loss of about $500 million on a deal to sell its energy business for a total of about C$455 million.
The energy group, the main index's second most heavily weighted sector, fell 1.2 percent as oil, Canada’s largest export, slipped. Cenovus Energy Inc. (TSE:CVE), the fourth-largest Canadian oil producer, slumped 4.7 percent to C$30.70 as second-quarter profit sank 55 percent on higher currency losses and lower hedging gains.
Encana Corp. (TSE:ECA), Canada’s largest natural gas producer, was swinging between gains and losses. The company swung to profit in the second quarter, snapping four quarters of losses, as oil and petroleum liquids production increased. Stripping out one-time items, Encana earnings rose to 34 cents a share from 27 cents a share, above the 19 cents a share predicted by analysts on average. Oil and liquids output increased 69 percent to average 47,600 barrels a day while gas production dropped 1 percent from a year earlier.
Industrial shares fell 2.1 percent. Canadian Pacific Railway Ltd. (TSE:CP), which operates in six provinces and 13 U.S. states, dropped 2 percent to C$127.69 after reporting profit that fell short of analysts' estimates. Bombardier Inc. (TSE:BBD.B), the world's only manufacturer of both planes and trains, skidded 0.6 percent to C$5.05, after delaying the maiden flight of its CSeries jet for the third time since November, saying it needs more time to test its largest-ever model.
Four groups out of ten gained on Wednesday, including financials, the main measure's most heavily-weighted sector, which advanced 0.5 percent.
Loblaw Cos. (TSE:L), Canada's largest food retailer, added 1.9 percent to C$48.87 after second-quarter earnings grew 14 percent to C$178 million, or 63 Canadian cents a share. Revenue rose 2 percent and same-stores sales increased 1.1 percent.
Rogers Communications Inc. (TSE:RCI.B), Canada's largest wireless carrier, gained 2.4 percent to C$42.20 as second-quarter earnings rose 29 percent to C$532 million, or 93 Canadian cents a share. Adjusted earnings advanced to 96 Canadian cents from 91 Canadian cents. Revenue grew 3 percent.
The junior S&P/TSX Venture Composite Index (CVE:OSPVX) extended this year's losses, sliding 0.1 percent to 929.17. The 393-member measure slumped 23.8 percent since the beginning of the year through Tuesday.
In commodities, crude fell as U.S. output surged to a 22-year high last week and Chinese manufacturing shrank more than economists predicted. September crude dropped 0.5 percent to $106.75 a barrel. Gold futures for December delivery fell 0.2 percent to $1,333.10 an ounce at 11:10 a.m. on the Comex in New York. Silver futures for September delivery retreated 0.2 percent to $20.205 an ounce in New York.
In the U.S., Canada's biggest trading partner, stocks dropped on Wednesday as investors pondered manufacturing data and earnings reports from AT&T Inc. to Boeing Co. The S&P 500 Index (INDEXSP:.INX) declined 0.1 percent to 1,690.74 at 11:40 a.m. in New York.
In the currency market, the Canadian dollar strengthened against the majority of its 16 most-traded peers on Wednesday. The loonie was little changed at C$1.0290 per U.S. dollar at 10:22 a.m. in Toronto. One loonie buys 97.18 U.S. cents.