Canadian Stocks Slump

Canadian stocks slumped, after soaring to a five-year high yesterday, as U.S. Federal Reserve Chair Janet Yellen said central bank stimulus could close down this fall and benchmark interest rates could skyrocket six months later.

Air Canada rallied 1 percent after Standard & Poor’s improved its debt rating on the airline yesterday. Athabasca Oil Corp. downgraded 4.1 percent after reporting a quarterly decline and projecting dropping production. Canfor Corp. bolster 2.4 percent, cutting down an eight-day retreat, as Raymond James & Associates improved its rating on the wood products producer.

The S&P/TSX Composite Index slide 34.94 points, or 0.2 percent, to 14,334.04 at 4 p.m. in Toronto. The index has jumped 5.2 percent this year.

“It looks like the Fed has opened up a bit to look beyond unemployment, so it gives them some more flexibility,” said Greg Eckel, fund manager at Morgan Meighen & Associates Ltd. in Toronto. He helps manage about C$1.4 billion with the firm.

The U.S. central bank declared that it will look at a wide range of data in deciding when to hike their goal interest rate from zero, dropping a pledge tying borrowing costs to a 6.5 percent jobless rate.

The Fed guesstimate the rate would be 1 percent at the end of 2015 and 2.25 percent a year later, in a better position compare to its previous projection, as they raise estimates for increases in the labor market. The Fed also slashed down the monthly pace of bond purchases by $10 billion, to $55 billion.

‘Considerable Time’

Yellen stated that the quantitative easing program would close this fall if the Fed stays in tapering purchases in measured actions. She said she sees a “considerable time” between the end of the stimulus and the first rate hike, meaning “six months or that type of thing.”

The Canadian market is especially sensitive to alterations in commodities, Eckel said. “A big driver has been the gold stock play, and it looks like some of the wind has come out of the sails there. The market has been spotty, a little nervous,” he said.

Gold for immediate delivery retreated the most in three months today, relinquishing 1.9 percent.

Air Canada rallied 1 percent to C$6.00, bringing this week’s hike to 7.7 percent. S&P boosted the firm’s debt rating to B from B -. The firm has stated its plans to congest more seats onto jets in its Rouge unit to turn unprofitable routes around.

Athabasca Oil decreased 4.1 percent to C$8.05. The firm, which operates in the Alberta oil sands, projects oil production would be 6,000 to 6,500 barrels a day in the first quarter and dive lower to 5,500 to 6,000 barrels a day in the second quarter.

Canfor rallied 2.4 percent to C$27 after Raymond James raised the firm to stable purchase from outperform. The stock gave up 12 percent during the eight days through yesterday. Pulp mills in northern Alberta may be forced to suspend the company works as early as this week due to a labor problem by truckers at Canada’s biggest port is causing lumber to pile up.

First Quantum Minerals Ltd. slumped 2.5 percent to C$19 after Evrim Resources Corp. said in a statement that First Quantum had pulled out of a partnership to mine copper in Mexico.

BlackBerry Ltd. skyrocketed 4.8 percent to C$10.75. The smartphone maker jumped 36 percent this year.

The material has been provided by InstaForex Company – www.instaforex.com