Canadian Stocks Sink to Two-Month Low as Crude Rout Deepens
Canadian stocks tumbled the most in two months as crude oil sank to a six-year low and iron ore slumped below US$40 a metric ton to lead declines in the resource-rich benchmark index.
Energy shares dropped 5.4 percent to the group’s lowest level since March 2009, as crude extended losses below US$38 a barrel in New York. The Organization of Petroleum Exporting Countries effectively abandoned its production target on Friday, fueling speculation a record global glut will continue. Raw-materials producers lost 3.3 percent on weakening demand in China and rising low-cost supply from the world’s top miners. Commodities producers make up about 30 percent of the Canadian benchmark.
The Standard & Poor’s/TSX Composite Index fell 315.94 points, or 2.4 percent, to 13,042.83 at 4 p.m. in Toronto, the most in two months. The gauge has declined for two consecutive weeks and has now lost 11 percent this year.
A volatility gauge for 60 of the largest, most liquid Canadian stocks jumped 9.7 percent after falling for three consecutive weeks.
The Bloomberg Commodity Index, a basket of prices for natural resources from copper to oil and gold, dropped 2.7 percent.
Hudbay Minerals Inc., First Quantum Minerals Ltd. and Teck Resources Ltd. sank at least 9.4 percent. Paramount Resources Ltd. tumbled 22 percent, its biggest drop in 28 years. Penn West Petroleum Ltd. and Baytex Energy Corp. fell at least 17 percent. Energy companies have fallen 28 percent this year.
Canadian airlines jumped on the cheaper oil prices. Air Canada gained 2.6 percent, it’s biggest gain since Nov. 6, while WestJet Airlines Ltd. gained 0.9 percent. Macquarie Research also raised WestJet to the equivalent of buy from neutral.
Among the S&P/TSX’s best performers, ProMetic Life Sciences Inc. rose 6.6 percent. The biopharmaceutical company said its trial for a coagulation disorder drug met safety metrics, while patients showed an immediate therapeutic response.