Traders work on the floor of the New York Stock Exchange Nov. 2.Brendan McDermid/Reuters
Canadian stocks fluctuated on Monday after posting the best gain in six months in October, as Valeant Pharmaceuticals International Inc. rebounded from its worst-ever monthly loss amid intense scrutiny over its business practices.
Valeant rallied 9 per cent, the most in a month, after stock commentary site Citron Research said it won't release new allegations against the drugmaker. Royal Bank of Canada led lenders lower, while the nation's top railroad operators fell after monthly rallies.
The Standard & Poor's/TSX Composite Index rose 18.57 points, or 0.1 per cent, to 13,547.74 in Toronto. The Canadian benchmark equity gauge rose 1.7 per cent in October, the best since April. It was nevertheless the worst performance among 24 developed-nation markets in that time, as a gauge of global equities capped its best month in four years.
The advance in Valeant offset losses among raw-materials producers as economic data from China continued to pressure commodities prices. China's official purchasing managers index remained at 49.8 in October, compared with an estimate of 50, the line between expansion and contraction. China is Canada's largest trading partner after the U.S. and one of the world's most important resource consumers.
Valeant rebounded from a record 49-per-cent plunge in October. On Oct. 21, Citron accused Valeant of an Enron-like strategy of recording fake sales using an affiliated pharmacy, Philidor Rx Services, to store inventory and record those transactions as sales. Valeant shares plummeted 28 per cent in one day. The company has denied the allegation.
Yamana Gold Inc. dropped 3.5 per cent and Teck Resources Ltd. lost 2.5 per cent to lead raw-materials producers lower. Gold slipped to a four-week low as traders weighed the increasing likelihood the U.S. Federal Reserve will raise interest rates in December. Copper was little-changed in London after falling to the lowest level in a month. The base metal is down 19 per cent this year because of waning demand from China.
Gold producers rallied 7.8 per cent last month, the most since January, as weakening global growth, including in Europe and China, dimmed speculation of a rate increase. The probability that U.S. policy makers will increase borrowing costs has since risen to 50 per cent according to futures data after officials signaled last week a December increase remains on the table.
US. stocks advanced after their best monthly gain in four years, as corporate deal activity helped boost health-care companies while manufacturing data gave mixed signals on the health of the global economy.
Dyax Corp. jumped 30 per cent after Shire Plc agreed to buy the drugmaker for at least $5.9-billion. Mylan NV and AbbVie Inc. rose more than 3.1 per cent. Pfizer Inc. climbed 3 per cent as people with knowledge of the matter said the company is making progress in talks to buy Allergan Plc. Cardinal Health Inc. rallied 4.1 per cent after posting better-than-estimated quarterly results.
The Standard & Poor's 500 Index added 0.6 per cent to 2,092.72 New York, after rising 8.3 per cent last month. The Dow Jones Industrial Average gained 112.04 points, or 0.6 per cent, to 17,775.58. The Nasdaq Composite Index climbed 0.8 per cent. Equity futures earlier fell as much as 0.5 per cent after official data showed Chinese output shrank for a third month, before erasing the drop after reports signalled a pickup in euro-area manufacturing.
"The global data today shows stable economic conditions, which is improving sentiment," said Mark Luschini, chief investment strategist in Philadelphia at Janney Capital Management LLC, which oversees about $68-billion. "M&A activity is always a good litmus test for the sentiment of companies and usually speaks well to market conditions, and we've seen some big deals lately."
After the Federal Reserve's comments last month boosted prospects for a rate increase this year, investors are watching data for signs of whether the economy can withstand higher borrowing costs. Traders are pricing in 48-per-cent odds for a December liftoff, trimming slightly from 50 per cent before Monday's gauge on factory activity.
A U.S. reading today showed manufacturing remained stuck in neutral in October as factories struggled with dwindling overseas demand and well-stocked customers at home. The Institute for Supply Management's index was little changed at 50.1, the weakest since May 2013, after 50.2 in September. A reading of 50 is the dividing line between expansion and contraction.
The October payrolls report due on Friday will also begin to loom larger on investor sentiment as the week progresses. Economists surveyed by Bloomberg project the economy added 182,000 jobs last month, up from Septembers 142,000, with the unemployment rate slipping to 5 per cent from 5.1 per cent a month earlier.
U.S. stocks rallied the most since 2011 in October amid a rebound in raw-materials and energy shares. The advance pushed the S&P 500 to a two-month high on Oct. 28 , before the index fell on Friday. The benchmark closed last week 2.4 per cent below its all-time high set in May as equities recover from a third- quarter swoon triggered by concern that weakening growth in China would spread.
More than 100 companies in the S&P 500 are scheduled to announce earnings this week. Of those that have released results this season, about 75 percent exceeded profit projections, while 55 per cent missed sales forecasts. Analysts estimate earnings dropped 3.9 per cent in the third quarter, up from predictions for a 6.1-per-cent decline a week earlier.