Canada’s main stock index fell on Friday, as shares of grocers and other consumer staple companies took a beating on news that internet retail company Amazon.com Inc was buying Whole Foods Market Inc.
Amazon announced before markets opened that it was purchasing the U.S. organic supermarket chain for $13.7-billion, including debt, marking its biggest foray into the brick-and-mortar retail sector.
The Canadian consumer staples sector tumbled as much as 3.36 per cent in its sharpest fall since October 2008 before it pared losses to 2.3 per cent.
The country’s largest grocery chain operators all declined sharply.
Loblaw Companies Ltd, which has more than 2,300 corporate, franchised and associate-owned grocery stores and pharmacies across Canada, was down 3.8 per cent to $72.61, after falling as much as 5.8 per cent.
Empire Company Ltd, which has about 1,500 Canadian stores operating under banners including Sobeys and FreshCo, fell 3.3 per cent to $18.80. Metro Inc, which operates some 600 supermarkets in Quebec and Ontario, fell 4.1 per cent to $42.64.
The Toronto Stock Exchange’s S&P/TSX composite index fell 15.87 points, or 0.1 per cent, to 15,144.55. Of the index’s 10 main groups, seven lost ground.
Consumer discretionary shares also retreated sharply, declining 1.2 per cent, with Magna International Inc taking a 3.8-per-cent hit to trade at $57.73.
Dollarama Inc slid 1.5 per cent to $121.45, while Canadian Tire Corp fell 1.7 per cent to $146.90.
The materials group, which includes precious and base metals miners and fertilizer companies, lost 0.6 per cent.
Teck Resources Ltd fell 5.2 per cent to $20.46, extending losses from the previous session after the miner said it was lowering its forecast of the average realized price for its steelmaking coal in the second quarter. Several analysts cut its target price on the news.
The energy group was one of the few gainers, climbing 0.6 per cent on the back of firmer crude oil prices. U.S. crude prices were up 0.4 percent to $44.64 a barrel.
Pipeline operator Enbridge Inc rose 1.5 per cent to $51.05.
Editor’s picks: The week's most oversold and overbought stocks on the TSX;
Friday’s analyst upgrades and downgrades;
Barlow: ‘‘The stock market is now 35% passive and 65% terrified’
U.S. stocks also fell on Friday as Wal-Mart and other retailers were slammed by Amazon.com’s biggest foray into the brick-and-mortar retail sector.
Amazon shares were up 3.2 per cent at $995.18, while Whole Foods surged 27 per cent to $41.95.
The deal by Amazon, a proven retail disruptor, is seen as a threat to supermarket chains and grocers, given the company’s readiness to sacrifice margins for market share.
Wal-Mart sank 6.2 per cent to $74.03 even as the big box retailer strengthened its ecommerce presence by buying online men’s fashion retailer Bonobos for $310-million on Friday. The stock weighed the most on the S&P 500 and the Dow.
“Dominant players like Wal-Mart, Kroger, Costco, and Target now have to look over their shoulders at the Amazon train coming down the tracks,” said Charlie O’Shea, lead retail analyst at Moody’s Investors Service.
Kroger was the biggest loser on the S&P 500, down 14 per cent; while Sprouts Farmers Market was off nearly 10 per cent.
“I would not like to be somebody playing in the grocery space right now,” said Jan Rogers Kniffen, chief executive of retail consultancy firm J. Rogers Kniffen WWE in New York.
The S&P 500 consumer staples tumbled 1.7 per cent - its biggest drop since November last year.
The Dow Jones Industrial Average was down 35.58 points, or 0.17 per cent, at 21,324.32, the S&P 500 was down 7.48 points, or 0.31 per cent, at 2,424.98 and the Nasdaq Composite was down 32.00 points, or 0.52 per cent, at 6,133.50.
Six of the 11 major S&P sectors were lower. Technology was the second-biggest loser after consumer staples, led by losses in Microsoft and Apple.
The sector, which had surged 17.4 per cent in 2017, is on track for its second straight week of decline as investors booked profits amid worries of stretched valuations.
Oil prices edged up from 2017 lows on Friday but remained on track for a fourth consecutive week of losses because of excess supplies, despite OPEC-led production cuts.
Brent crude futures were up 57 cents at $47.49 per barrel. U.S. West Texas Intermediate (WTI) crude futures were at $44.85 per barrel, up 39 cents.
“The market took a breather yesterday and is trying to recover somewhat this morning. It is by no means bullish,” said Tamas Varga, analyst at brokerage PVM Oil Associates.
Oil prices are more than 12 per cent below where they were in late May, when producers led by the Organization of the Petroleum Exporting Countries (OPEC) extended for nine months a pledge to cut output by 1.8 million barrels per day (bpd). The cuts had been due to end this month and will now run till March.
- Costco Wholesale Corp$157.07-0.01(-0.01%)
- Amazon.com Inc$953.29-5.18(-0.54%)
- Loblaw Companies Ltd$68.12+0.30(+0.44%)
- Wal Mart Stores Inc$79.71+0.40(+0.50%)
- Metro Inc$41.86+0.07(+0.17%)
- S&P/TSX Composite14,951.88-0.45(0.00%)
- Dow Jones Industrials21,703.75+29.24(+0.13%)
- NASDAQ NMS COMPOSITE INDEX6,213.13-3.40(-0.05%)
- S&P 500 INDEX2,428.37+2.82(+0.12%)
- Crude Oil Front Month Futures$47.40-1.11(-2.29%)
- Updated August 21 4:00 PM EDT. Delayed by at least 15 minutes.