Canadian stock market falls after Moody’s downgrades major banks

Canada’s main stock market fell on Thursday, as U.S. credit ratings agency Moody’s downgraded the country’s six largest banks and a significant change from the country’s largest airline contributed to the overall result. (Photo: Rodrigo Paoletti/Facebook)

TORONTO—Canada’s main stock market fell on Thursday, as U.S. credit ratings agency Moody’s downgraded the country’s six largest banks and a significant change from the country’s largest airline contributed to the overall result.

Toronto Stock Exchange’s benchmark Standard & Poor’s/TSX Composite retreated 82.66 points, or 0.53 percent, to close the day at 15,550.55 points. Eight of the 10 sub-groups lost ground during the session.

The TSX Financial group had the biggest impact on the day, falling 0.81 percent after Moody’s downgraded the ratings of Canada’s top-six due to a “more challenging operating environment in Canada for the remainder of 2017 and beyond.” All six banks were downgraded by a level.

The No. 2 ranked Toronto-Dominion (TD) Bank was lowered to an Aa2 rating, while the remaining five banks fell to an Aa rating. Shares of TD Bank fell 0.74 percent to close at 63.42 Canadian dollar.

Meanwhile, No. 6 ranked National Bank of Canada and No. 5 ranked Canadian Imperial Bank of Commerce were hit the hardest, retreating 2.23 percent and 1.32 percent, respectively.

On a positive note, shares of alternative mortgage lending firm Home Capital Group Inc soared 23.40 percent to 10.81 Canadian dollars after reports that the firm was discussing the sale of assets for 2 million Canadian dollars to lower their outstanding debt.

The Consumer Discretionary group, which consists of producers of non-essentials goods such as automobiles, apparel and entertainment, was also a drag on the day, falling 0.70 percent after loyalty management firm Aimia Inc would be losing one of their key partners. vAir Canada, the largest airline in the country, notified the Montreal-based firm that they would withdraw from their Aeroplan loyalty program in June 2020 to launch their own program. As a result, shares of Aimia plunged 62.71 percent to 3.33 Canadian dollars.

Conversely, shares of Air Canada rocketed 10.54 percent to 16.46 Canadian dollars, its highest close in ten years. The airline firm believes the net present value of a loyalty program is worth in excess of 2 billion Canadian dollars.

The remaining groups to finish in negative territory were: Consumer Staples (0.93 percent), Energy (0.84 percent), Telecommunications (0.45 percent), Information Technology (0.24 percent), Utilities (0.07 percent), and Industrial (0.04 percent).

Energy closed lower after Calgary-based Enbridge shares fell 3.13 percent to 54.77 Canadian dollars after reporting lower than expected first quarter results. The price of Brent crude oil finished up 0.45 cents to 50.70 U.S. dollars a barrel.

The news was not all bad, as Health Care and Materials sectors finished the day with gains of 3.22 percent and 1.35 percent, apiece.

Health Care received a boost from two group members who were among the top-15 most traded stocks by volume on the day.

Canopy Growth Corporation, the largest medical marijuana distributor in the country, saw shares shot up 9.64 percent to 8.53 Canadian dollars, while drugmaker Valeant Pharmaceuticals International shares surged 8.77 percent to close at 18.85 Canadian dolars.

The Materials group, which is comprised of producers of gold, precious metals, and raw materials, moved up after gold, silver and copper all finished ahead.

The spot price of an ounce of gold rose 0.49 percent to 1,224.80 U.S. dollars, while the same weight of silver gained 0.80 percent to 16.31 dollars. Copper outperformed both metals with a 0.88 percent uplift to finish the day at 2.5073 U.S. dollars a pound.

The Canadian dollar slipped 0.18 cents to end the day at 0.7296 U.S. dollars.