Traders work on the floor of the New York Stock Exchange (NYSE) April 5.Brendan McDermid/Reuters
Canadian stocks slipped a fourth day on Tuesday, the longest losing streak in almost two months, as economic data showed exports posted their biggest fall since the recession and amid simmering concerns that weakness in global growth will deepen..
The Standard & Poor's/TSX Composite Index fell 0.24 per cent, or 31.49 points, to 13,304.66 in Toronto, extending losses for a fourth day, the longest stretch of declines since February. While the Canadian benchmark equity gauge has lost 1.54 per cent in that time, it's still up 2.3 per cent this year and remains one of the best-performing developed markets in the world.
Canadian exports in February fell 5.4 per cent to $43.7- billion, the biggest drop since May 2009 after rising to records in January. Canada's trade deficit widened to twice what economists forecast. Non-energy exports fell 4.2 per cent, a blow to the Bank of Canada's narrative that those industries will drive Canada's economic recovery in coming years.
The S&P/TSX has stumbled out of the gates in the second quarter amid a retreat in commodities, especially crude, in a reversal from the first quarter's resource-fueled rally. The broader S&P/TSX's valuation has slipped from last month's high of 21.9 times reported earnings to 21.1 times. That's still 13 per cent more expensive than the 18.6 times multiple of the Standard & Poor's 500 Index, data compiled by Bloomberg show.
Oil advanced on speculation a pact to freeze crude output may be reached without the participation of Iran.
Futures rose from a one-month low. Oil-producing countries can come to an agreement capping crude production at January levels even if Iran doesn't join the move to help shore up prices, according to Kuwait's OPEC governor. The dollar dropped to the lowest level against the yen in more than a year, bolstering the appeal of commodities priced in the U.S. currency. A government report Wednesday is projected to show that U.S. crude supplies climbed.
Raw-materials producers climbed 1.9 per cent as a group as gold producers advanced the most in a week. Barrick Gold Corp. and Kinross Gold Corp. added at least 4.7 per cent.
The energy group retreated 0.4 per cent.
Valeant Pharmaceuticals International Inc. surged 10 per cent, rebounding from a 2011 low. The drugmaker said a special "ad hoc" board committee found no additional accounting issues that would require more restatements and the company plans to file its annual report on or before April 29.
Valeant is facing push back from some of its lenders as it seeks to waive a default and loosen restrictions on its debt, according to people with knowledge of the matter. Valeant has been seeking relief from a technical default that arose when it didn't file its 10-K before March 15.
U.S. stocks also fell, with the Standard & Poor's 500 Index posting the steepest loss in four weeks, amid simmering concerns that weakness in global growth will deepen.
Declines accelerated in the final minutes as banks paced the retreat, sinking along with Treasury yields as bonds rallied on haven demand. Bank of America Corp. slid 2.4 per cent. Health-care companies fell for the first time in three days, dragged lower by Allergan Plc's 15-per-cent tumble after the government took steps to limit so-called inversion deals, threatening its merger with Pfizer Inc.
The S&P 500 dropped 1 per cent to 2,045.29 in New York, ending the longest streak of calmness in 13 months. The index's move had been capped within 1 per cent in either direction in the last 15 days, something not seen since March 2015.
The Dow Jones industrial average fell 133.06 points, or 0.75 per cent, to 17,603.94, while the Nasdaq Composite dropped 47.86 points, or 0.98 per cent, to 4,843.93.
Investors are turning cautious after worse-than-expected economic data in the U.S. and Germany this week, and comments from International Monetary Fund head Christine Lagarde highlighting greater risks to the global economy. That marks a reversal from optimism last month, when dovish comments from Federal Reserve Chair Janet Yellen helped add $4.5-trillion to the value of global equities. The U.S. central bank releases the minutes from its latest meeting on Wednesday.
"We're stalling out," said Michael Block, chief strategist at Rhino Trading Partners LLC in New York. "That's part of it, and it's being exacerbated by this continued rally in the Japanese yen and the release from the Treasury that's causing a lot of pain in Allergan. We have Fed minutes tomorrow and the expectation is for it to be super dovish, and if it's not then people might get confused."
The rally that lifted the S&P 500 as much as 13 per cent from a 22-month low in February has started to lose momentum, with sentiment shifting as investors assess whether central banks can fend off weakness in the global economy. Worries that a slowdown in China would spread, intensified by tumbling crude prices had sent stocks to their worst-ever start to a year. Stabilizing oil and signals that policy makers would continue efforts to boost growth helped support the late-quarter comeback in equities.
Comments Tuesday from Ms. Lagarde provided no comfort to investors apprehensive over global growth. The downside risks have increased and "we don't see much by way of upside," she said in an interview with Bloomberg TV.
The Chicago Board Options Exchange Volatility Index rose 8.1 per cent to 15.26, on track for the biggest back-to-back gain in almost two months. The measure of market turbulence closed Friday at a seven-month low. As volatility ebbed, the S&P 500 has gone 15 days without a daily move of 1 per cent or more, the longest in 13 months.
West Texas Intermediate for May delivery increased 19 cents, or 0.5 per cent, to settle at $35.89 a barrel on the New York Mercantile Exchange. Futures touched $35.24, the lowest since March 4.
Brent for June settlement rose 18 cents, or 0.5 per cent, to $37.87 a barrel on the London-based ICE Futures Europe exchange. It earlier touched $37.27, also the lowest since March 4. The global benchmark closed at a 73-cent premium to WTI for June delivery.
"The market has been under tremendous selling pressure," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "We've been watching the wheels come off of the plans for a freeze at the April 17 meeting. We'll probably get another inventory build as well."
Oil's rebound from a 12-year low has stalled amid doubts about the prospects of a proposed deal to freeze supply. Saudi Arabia will only cap production if it's joined by other major producers including Iran, the kingdom's deputy crown prince said last week. Russia and all OPEC members except Libya will attend the meeting in Doha.
The Organization of Petroleum Exporting Countries and other producers have no option but to reach an agreement to freeze output at the meeting in Doha, because prices are too low, Nawal al-Fezaia, Kuwait's OPEC governor, said in a telephone interview.
Iranian Oil Minister Bijan Namdar Zanganeh said he will attend the summit if he finds time, according to the country's semi-official Mehr news agency. The nation has refused any limits on crude supply as it restores oil exports after international sanctions were lifted in January.
"There's a growing realization that all of these statements are pre-meeting positioning," said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. "I wouldn't read too much into them. It looks like the meeting will take place and if it occurs there's a good chance an agreement will be reached."
With files from Reuters