Dec. 4 (Bloomberg) -- Canadian stocks fell to a one-month low after a report showed U.S. employers hired more workers than forecast, spurring concern the Federal Reserve will begin tapering stimulus.
Royal Bank of Canada, the nation’s largest lender, lost 0.8 percent to pace declines among financial stocks. CGI Group Inc. dropped 3.9 percent after Newsweek reported that James Chanos has taken a short position on the company, citing people familiar with the matter. Air Canada, the nation’s largest airline, rose 3.5 percent after Bank of Montreal analysts raised their price estimate for the stock.
The Standard & Poor’s/TSX Composite Index fell 14.95 points, or 0.1 percent, to 13,304.92 at 4 p.m. in Toronto, the lowest since Nov. 7. The benchmark equity gauge has risen 7 percent this year, the fourth-worst performer among developed markets ahead of Austria, Hong Kong and Singapore.
“This is a case where good news is perceived as bad news,” said Bob Decker, fund manager with Aurion Capital Management in Toronto. He helps manage about C$6 billion ($5.62 billion) with the firm. “We’re in a transition zone between when QE was driving the market and when earnings growth and economic activity will drive the market, so it’s created a choppy environment.”
U.S. companies boosted payrolls by 215,000 in November, a report from the ADP Research Institute said, ahead of the 170,000 median projection from a Bloomberg survey of economists. November non-farm payrolls and unemployment rate data are scheduled to be released by the Bureau of Labor Statistics on Dec. 6.
Bank of Canada Governor Stephen Poloz kept his main interest rate unchanged at 1 percent, where it’s been for more than three years, as expected by economists surveyed by Bloomberg. The risks of inflation staying below target “appear to be greater” in an economy that’s two years away from reaching full output, the central bank said.
Financial stocks lost 0.6 percent as a group as nine of 10 industries in the S&P/TSX declined.
AGF Management Ltd. slumped 9.3 percent, the most since 2009, to C$13. The company reported assets under management of C$34.4 billion as of the end of November, a 12 percent decline compared with a year ago.
Royal Bank slipped 0.8 percent to C$69 and Bank of Nova Scotia lost 0.8 percent to C$63.68. The two banks are scheduled to report earnings in the next two days, along with Toronto- Dominion Bank and Canadian Imperial Bank of Commerce.
Thompson Creek Metals Co. slumped 9.2 percent to C$2.48, the biggest decline since May 2012. Daniel Earle, an analyst with TD Securities, said the mining company will not be able to generate enough cash to repay $1 billion in debt maturities in 2017 and 2019 assuming the price of gold is $1,300 an ounce and $3 a pound for copper.
CGI Group, the developer behind the U.S. government’s medical-insurance exchange website, lost 3.9 percent to C$37.03, for the largest retreat since September. The Newsweek report said Chanos, who predicted the collapse of Enron Corp. in 2001, includes CGI Group among his largest short positions. The stock has rallied 62 percent this year.
Air Canada, the best-performing stock in the S&P/TSX this year, gained 3.5 percent to C$8. Fadi Chamoun, an analyst with BMO Capital Markets, raised his share-price target for Air Canada to C$10 while maintaining an outperform rating, the equivalent of a buy. Air Canada has soared 357 percent this year.
“The combination of lower costs and growing revenues should enable strong improvement in margins and return on invested capital,” Chamoun said in a report.
--Editor: Lynn Thomasson