A specialist trader watches developments following the explosions in Brussels, on the floor of the New York Stock Exchange (NYSE) March 22.Brendan McDermid/Reuters
Canadian stocks fell on Tuesday, joining declines across global markets as three bombings in Brussels fueled demand for haven assets from gold to Treasuries.
The Standard & Poor's/TSX Composite Index fell 0.5 per cent, or 67.6 points, to 13,493.49 in Toronto. The Canadian benchmark equity gauge is still up 4 per cent this year and remains one of the best-performing developed markets in the world, posting returns ahead of the U.S., Germany and U.K.
Equities dropped around the world as Belgium remained at the highest terror-alert level amid fears of follow-up attacks after two explosions at the airport and one at a subway station near the European Union headquarters. Travel shares bore the brunt of declines, while gold advanced.
The retreat Tuesday marked a slowdown for the the S&P/TSX, which has rebounded 14 per cent from a 2 1/2-year low in January after last year notching one of the worst declines among developed markets. The Canadian benchmark equity gauge now trades at 21.5 times earnings, about 16 per cent more expensive than the valuation of the U.S. equity benchmark, the Standard & Poor's 500 Index, data compiled by Bloomberg show.
Losses were muted Tuesday as gold's advanced lifted producers of the metal. Energy producers also advanced. Industrial and materials companies fell the most in the index.
Investors in Canada were also awaiting the first budget to be presented by Prime Minister Justin Trudeau's government after thge market closed Tuesday, one expected to push the country deeper into deficit to jumpstart sluggish economic growth.
Valeant added 9.4 per cent, extending gains a second day. The drugmaker surged yesterday after shaking up its senior leadership, including the ouster of CEO Michael Pearson and billionaire investor Bill Ackman joining the board. Briefly the largest company in Canada by market capitalization last year, Valeant has lost almost 90 per cent of its value from an August peak.
Veresen Inc. surged 7.2 per cent, headed for the highest close this year, after the energy infrastructure company has agreed to a deal with Jera Co. to sell at least 1.5 million tonnes a year of natural gas liquefaction capacity at Veresen's Jordan Cove LNG facility in Oregon.
U.S. stocks faded in light trading, with drugmakers paring gains that put the Nasdaq Composite Index on course for the longest rally in 11 months, while travel-related shares sank in response to deadly terrorist attacks in Brussels.
Other major indexes were little changed after briefly erasing losses sparked by bombings at the Belgian capital's airport and a subway station that killed at least 31 people. Delta Air Lines Inc. and American Airlines Group Inc. declined more than 1.2 per cent, off the worst levels of the day. Amgen Inc. increased 2.5 per cent to a one-month high and Pfizer Inc. added 1.2 per cent, spurred by a rebound in Valeant Pharmaceuticals International Inc. Apple Inc. increased 0.9 per cent.
The Nasdaq Composite Index rose 0.3 per cent to 4,820.68 at in New York, climbing for a fifth day. The gauge erased a 0.6-per-cent loss and gained as much as 0.6 per cent. The Standard & Poor's 500 Index slipped 0.1 per cent to 2,049.95, after briefly wiping out a 0.5-per-cent decline. The Dow Jones Industrial Average fell 37.15 points, or 0.2 per cent, to 17,586.72, on the verge of ending the longest winning streak since October.
"The market appears to be more resilient than you'd expect after a terrorist attack," said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co. in Milwaukee. "They're horrible to see, but it's a weird world and you see these kind of events and they're not as shocking anymore. It's a quiet, slowish market where we're digesting the news."
Activity was light again in this holiday-shortened week after Monday marked the lowest volume this year. Trading in S&P 500 shares was 30 per cent below the 30-day average for this time of day. That follows two of 2016's slowest sessions last Monday and Tuesday before the Federal Reserve meeting. U.S. stock markets will be closed in observance of Good Friday.
In the face of the Brussels attacks, equities are losing little ground amid a five-week rally bolstered by improving economic data, rising crude prices and optimism that central banks around the world will continue to support growth. It's another indication of the market's wherewithal after the S&P 500 erased the fallout from a tumultuous start to 2016, rebounding 12 per cent since its February low and turning positive for the year last week.
"Usually with these types of events, the second time around the impact on volatility is much less than the first time around," said Michael Purves, chief global strategist at Weeden & Co. in Greenwich, Conn. "These are unfortunately almost semi-expected at this point. The markets are getting to the point where they even ignore it. A terror attack is a tragedy, but it's not a tragedy for the markets."
The main U.S. equity gauge is poised for the first monthly increase since November, which would halt the longest streak of declines since 2011. Worries over China's slowdown and routs in oil and banks had dragged the S&P 500 last month to the lowest level since 2014. It's now among the top three best-performers this year for developed-market benchmarks tracked by Bloomberg.
The Chicago Board Options Exchange Volatility Index rose 3.6 per cent Tuesday to 14.28, after closing yesterday at a seven-month low. The measure of market turbulence known as the VIX is on its way toward a sixth weekly retreat which would be the longest since 2008.
Seven of its 10 main industries fell Tuesday, with consumer staples shares slipping the most. Health-care companies gained for a third session, rising 0.8 per cent, while technology and commodity shares also edged higher.
Health-care companies extended a three-day gain to 2.6 per cent, led by drugmakers. The Nasdaq Biotechnology Index rose 2.4 per cent toward a two-week high, while an S&P biotech gauge added to its longest rally since November. Akorn Inc. surged 42 per cent, the most in seven years, after reporting preliminary results for 2015 and forecasts for the current fiscal year.
Royal Caribbean Cruises Ltd., Carnival Corp. and Priceline Group Inc. sank more than 2.2 per cent following the Brussels bombings. Lodging companies Marriott International Inc. and Wyndham Worldwide Corp. fell at least 1.2 per cent.
Airlines helped weigh on a group of industrial stocks, which which were little changed. The Bloomberg U.S. Airlines Index slid 1.1 per cent, paring an earlier 2.2-per-cent drop, with Delta and American Airlines slumping the most in two weeks.
Oil closed above $41 a barrel in New York after terrorist attacks in Brussels, amid forecasts that U.S. crude inventories climbed from an 86-year high.
Futures were little changed after earlier falling as much as 1.8 per cent following explosions in a Brussels airport departure hall and a subway station. U.S. crude stockpiles are forecast to have risen last week, keeping supplies at the most since 1930. Oil gained Monday after OPEC Secretary General Abdalla El-Badri said that 15 or 16 nations will attend oil-output freeze talks on April 17.
"The oil market initially reacted to the Brussels attacks," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "The drop was short-lived. The market has a lot of support."
Oil slumped to a 12-year low in February before rising on speculation that stronger demand and falling U.S. output will ease a global surplus. The drop in production outside the Organization of Petroleum Exporting Countries and a decline in U.S. drilling show that the group's strategy of letting the market rebalance itself is working, Mr. El-Badri said in Vienna Monday.
West Texas Intermediate for May delivery fell 7 cents to settle at $41.45 a barrel on the New York Mercantile Exchange. Futures climbed as much as 0.9 per cent. Total volume traded was 11 per cent above the 100-day average at 2:39 p.m. The April contract rose 1.2 per cent to $39.91 on Monday, when it expired.
Brent for May settlement rose 25 cents to $41.79 on the London-based ICE Futures Europe exchange. The global benchmark crude closed at a 34-cent premium to WTI.
U.S. crude supplies probably climbed 2.53 million barrels last week, according to the median of responses in a Bloomberg survey of analysts before the release of Energy Information Administration data on Wednesday. Stockpiles at Cushing, Okla., the nation's biggest oil-storage hub and the delivery point for WTI futures, are forecast to have climbed 335,000 barrels.
Saudi Arabia will join the meeting of producers from within and outside OPEC in Doha, Qatar, next month, adding weight to the campaign by financially stricken crude exporters to freeze output and overcome the glut that's weighing on the market. Nigeria will attend while Libya will skip the meeting, according to a people familiar with the matter.
"The market continues to digest the news of the OPEC and other producers meeting in April," said Rob Haworth, a senior investment strategist in Seattle at U.S. Bank Wealth Management, which oversees $128-billion of assets.
Brazil won't join the meeting, the energy ministry said Monday by e-mail. Argentina isn't planning to send a delegation, Juan Jose Aranguren, the nation's Energy & Mining Minister, said Monday in an e-mail.