Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on Nov. 23 in New York City.Spencer Platt/Getty Images
Canadian stocks fell on Monday, erasing early gains, as Valeant Pharmaceuticals International Inc. slumped, offsetting an advance in energy producers after Alberta unveiled a revamped climate change policy and Saudi Arabia said it's ready to work to stabilize global oil markets.
Equities fell 0.38 per cent, erasing an advance of as much as 0.6 per cent in the morning. Valeant lost 3.3 per cent, reversing an earlier 7.7-per-cent rally and snapping a three-day advance. The embattled drugmaker has tumbled 66 per cent from an Aug. 5 record amid scrutiny over its pricing practices.
The Standard & Poor's/TSX Composite Index fell 51.11 points to 13,382.38 in Toronto. The S&P/TSX added 2.7 per cent last week, the most since Oct. 9. The index has pared declines for the year to 8.4 per cent, trailed only by Singapore and Greece among developed markets.
Royal Bank of Canada and Bank of Nova Scotia slipped to lead lenders lower. Industrial shares dropped 0.8 per cent as a group, as Canadian Pacific Railway Ltd. dropped 1.1 per cent to snap a five-day gain. Canadian Pacific jumped 9.8 per cent last week after going public with its pursuit of Norfolk Southern Corp.
Alberta provided greater clarity for energy companies operating in the province, saying it will cap oil-sands emissions for producers such as Suncor Energy Inc. and Imperial Oil Ltd., implement an economy-wide price for carbon and phase out coal power plants.
TransAlta Corp., an electricity generator in Calgary, soared 9.4 per cent for the biggest advance in two years before being halted late in the session pending news. In the post market, TransAlta announced a $200-million investment from Alberta Investment Management Corporation.
Analysts at RBC Capital raised the stock to "sector perform," the equivalent of a neutral rating, in part due to clarity from the release of Alberta's climate change framework.
"It is now certain that coal-fired generation will be phased out by 2030," TransAlta Chief Executive Dawn Farrell said in a statement Nov. 22. The company is reviewing the new policy to assess how it will impact TransAlta's business and strategy, the release said.
Oil traded near $42 a barrel in New York on Saudi Arabia's repeated pledge to work with OPEC and other producers to stabilize global crude markets.
Futures rebounded from a 3.6-per-cent drop after the report by the Saudi Press Agency. Barclays Plc said this doesn't reflect any policy shift by the kingdom, the biggest member of the Organization of Petroleum Exporting Countries, which will meet Dec. 4. Saudi oil minister Ali al-Naimi made similar comments last week. Speculator short positions ended Nov. 17 at the highest in almost three months, U.S. Commodity Futures Trading Commission data show.
Oil has slumped about 45 per cent over the past year amid speculation a global glut will persist as OPEC continues to pump above its collective quota. The organization has signaled since last year that it would only reduce output to remove the surplus if producers outside the group shared the burden.
WTI for January delivery slipped 15 cents to settle at $41.75 a barrel on the New York Mercantile Exchange. It earlier dropped as much as $1.49 and climbed as much as 85 cents. The December contract expired Friday after falling to the lowest since Aug. 26. The volume of all futures traded was 22 per cent above the 100-day average.
January Brent climbed 17 cents to end the session at $44.83 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude closed at $3.08 premium to WTI.
The price jump following the Saudi statement probably reflects that traders have acquired substantial short positions and are inclined to close these on bullish news, according to UBS Group AG. Short positions in Brent crude taken by speculators are at the highest level since October 2014, at 141,387 contracts, according to data from ICE Futures Europe.
"It's hard to see what else moved the price besides the Saudi statement, even though it's exactly what Oil Minister al- Naimi said last week," said Giovanni Staunovo, an analyst at UBS in Zurich. "For me there's nothing new, but the OPEC meeting is approaching and participants might prefer to close their short positions."
Energy and raw-materials producers, along with health-care stocks, have dropped at least 21 per cent this year to lead declines in the S&P/TSX. A combination of slowing economic growth in China and a rally in the U.S. dollar due to impending interest rate increases from the Federal Reserve as soon as December have crimped commodities prices.
First Quantum Minerals Ltd. sank 5.8 per cent. Copper fell below $4,500 a metric ton for the first time in six years and nickel touched the lowest in more than a decade.
U.S. stocks slipped following the Standard & Poor's 500 Index's best weekly rally this year, as gains in consumer companies were overshadowed by a retreat in Allergan Plc and Pfizer Inc. amid their record $160-billion merger deal.
The S&P 500 fell 0.1 per cent to 2,086.66 in New York, after rising 3.3 per cent last week, the most since December.
The Dow Jones industrial average fell 31 points, or 0.17 per cent, to 17,792.81, while the Nasdaq Composite dropped 2.44 points, or 0.05 per cent, to 5,102.48.
"There are more reasons than usual to sit on your hands during Thanksgiving week," said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York. "It's a combination of a lack of positive reaction in the oil market to help oil rally and concerns a little bit about Brussels. With stuff going on in Europe, people are asking, 'Do I really need to step to the plate after a 3 percent rally last week?'"
Stocks earlier extended declines as concerns over terrorism intensified after AFP reported an explosive belt was found in a trash bin in a Paris suburb. The search for a key suspect in the Paris terror attacks kept Brussels in an unprecedented lockdown that brought business to a standstill.
The main U.S. equity gauge surged last week after Federal Reserve officials signalled the economy is strong enough to withstand the first rate increase since 2006, and investors grew more comfortable with the notion that borrowing costs may soon be higher. Stocks have gained in seven of the past eight weeks, boosted by raw-material, industrial and technology shares, taking the S&P 500 to within 2 per cent of a record set in May.
San Francisco Fed President John Williams said on Saturday there's a "strong case" for a rate increase in December assuming U.S. economic data continues to be encouraging. Fed Governor Daniel Tarullo said Monday in an interview on Bloomberg Television economic data received since the central bank met in September had been mixed, as continued low inflation tempered his enthusiasm over progress made this year in lowering unemployment.
"As always with the Fed, we see Fed governors speak on both sides," said Tim Ghriskey, who helps oversee $1.5-billion as managing director and chief investment officer at Solaris Asset Management. "It's a way for them to calm the markets and get the markets used to any potential outcome. Eventually the Fed's going to raise and it's very likely to be somewhere in the near- term."
A report today showed sales of previously owned homes retreated in October from the second-highest level since 2007 as lean inventory limited momentum in residential real estate. Recent data have bolstered the case for raising borrowing costs for the first time since 2006, with traders now pricing in a 72-per-cent probability that the Fed will move next month. The Commerce Department's second reading on gross domestic product for the third quarter is due tomorrow.
The earnings season is drawing to a close, with almost all companies in the S&P 500 having reported. Of those, 75 per cent beat earnings estimates, while only 44 per cent exceeded sales forecasts. Analysts project profits for index members dropped 3.8 per cent in the third quarter, compared with for a 7.2-per-cent decline at the start of the season.