Canadian Stocks May Retreat as the Price of Crude Oil Declines

Canadian Stocks May Retreat as the Price of Crude Oil Declines

Canadian stocks may fall, as oil and gas producers including Suncor Energy Inc. retreat alongside the price of crude oil.

Declines in the Standard & Poor’s/TSX Composite Index may be limited as financial companies such as Royal Bank of Canada may extend gains amid speculation the U.S. Federal Reserve may be close to ending its interest-rate increases.

The S&P/TSX yesterday rose 120.32, or 1 percent, to 11,733.19 in Toronto. The index has gained 7.6 percent since reaching its year low on June 13 amid declining commodity prices and concern the Fed could raise rates too far, choking off economic growth.

Suncor Energy, the world’s biggest oil-sands miner, was shown falling C$1.95 to C$91, according to bids submitted to the Toronto Stock Exchange. EnCana Corp., Canada’s No. 1 natural-gas producer, may slide 24 cents to C$58.11, bids indicated.

Oil for August delivery fell 8 cents to $73.85 in New York.

The Fed said last week it would make further rate increases dependent on prospects for growth and inflation, following its decision to boost the benchmark rate to 5.25 percent for the 17th straight increase.

Royal Bank, Canada’s biggest lender by assets, was shown adding 30 cents to C$46.50, according to bids. Toronto-Dominion Bank, the No. 2, may gain 25 cents to C$56.96, bids showed.

UBS Securities analyst Jason Bilodeau wrote in a note that he believes the possible end to interest rate increases in the U.S. represents a potentially attractive buying opportunity for the financial group.

Lower or stable borrowing costs boost the value of bonds owned by banks, brokers and insurers, and increase demand for mortgages and loans.

Canadian Imperial Bank of Commerce, which Bilodeau raised to “buy” from “neutral,” was shown falling 5 cents to C$74.70, according to bids.

U.S. Stock Index Futures

U.S. stock-index futures fell after North Korea launched missiles over the Sea of Japan, ignoring demands by the U.S. to refrain from such tests.

S&P 500 futures expiring in September lost 5 to 1282.80 at 8:56 a.m. in New York. Dow average futures slid 42 to 11,247, and Nasdaq-100 Index futures dropped 13.25 to 1588.25.

U.S. stock markets were closed yesterday for Independence Day. U.S. stocks rose in abbreviated trading the day before on optimism that the Federal Reserve may put off raising interest rates.

The following is a list of companies whose shares may have unusual price changes in the Canadian market. This preview includes news that broke after the market closed yesterday. Stock symbols are in parentheses after company names and prices are from the last close.

Abitibi-Consolidated Inc. (A CN): Canada’s biggest newsprint maker was raised to “buy” from “neutral” by analyst Jaret Anderson at UBS Securities in Toronto, who said in a note that a 17 percent decline in the company’s share price in the past month was overdone, given Abitibi’s rising free cash flow, and because he expects newsprint prices to increase. Abitibi gained 9 cents, or 3 percent, to C$3.10. .

EuroZinc Mining Corp. (EZM CN): The Vancouver-based metals company whose shares have more than doubled this year said it started zinc production on schedule at its Neves-Corvo mine in Portugal. The company began producing metal on July 3 and expects to produce about 25,000 tons of zinc concentrate annually, it said in a statement. EuroZinc shares gained 17 cents, or 6.3 percent, to C$2.86.

Inco Ltd. (N CN): DIA Holdings Overseas BV, the biggest institutional investor in Inco’s Indonesian unit, PT International Nickel Indonesia, is urging other minority shareholders to join it in demanding that Phelps Dodge Corp. make a general offer for the remaining shares of the Indonesian unit as part of its $35.4 billion agreed upon takeover of Inco and Falconbridge Ltd. (FAL CN) Phelps Dodge said on June 30 that won’t happen. Inco added 40 cents, or 0.7 percent, to C$74. Falconbridge increased 20 cents, or 0.3 percent, to C$59.

Magna International Inc. (MG/A CN): Canada’s biggest car- parts maker was raised to “buy” from “neutral” at UBS AG. Magna shares advanced C$1.19, or 1.5 percent, to C$80.83.

Sears Canada Inc. (SCC CN): Today will be the second day of an Ontario Securities Commission hearing into Sears Holding Corp.’s C$899 million bid for Sears Canada. Investors led by Pershing Square Capital Management LP are trying to scuttle the takeover at the current offer of C$18 a share, saying the stock is worth twice that much. They asked the OSC to halt the sale, including the tender of 4.5 million shares owned by Bank of Nova Scotia, whose investment banking arm advised Sears on the deal. Sears Canada added 66 cents, or 3.6 percent, to C$18.99.

Transat A.T. Inc. (TRZ/B CN): The owner of Canadian charter carrier Air Transat was rated new “sector outperform” in new coverage by analyst Timothy James at CIBC World Markets in Toronto. He expects the shares to reach C$34.50 within 12 months to 18 months. Transat slid 36 cents, or 1.5 percent, to C$24.

WestJet Airlines Ltd. (WJA CN): Canada’s second-biggest carrier was rated “sector outperform” in new coverage by analyst Timothy James at CIBC World Markets in Toronto. The analyst expects the shares to reach C$15.50 within 12 months to 18 months. Westjet slipped 3 cents, or 0.3 percent, to C$10.95.


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