TORONTO (Reuters) - Canada’s main stock index pulled back on Thursday as investor caution about economic growth, geopolitical uncertainty and interest rate trajectories overpowered stronger-than-expected earnings from three of the country’s biggest lenders.
The most influential falls came from Canadian Pacific Railway Ltd (CP.TO), which fell 4.1 percent to C$208.80, and Toronto-Dominion Bank (TD.TO), which declined 1.1 percent to C$55.37 despite posting a surprisingly strong quarterly profit.
“Today is another example of investor confusion about which way to turn,” said Julie Brough, vice president at Morgan Meighen & Associates, citing myriad worries from a possible Greek default to Middle East violence to Fed rate hikes.
“Nobody’s feeling exuberant right now. It’s a cautious attitude that’s taken hold,” she said.
The Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE ended down 3.47 points, or 0.02 percent, at 15,107.00.
Brough said Canadian Pacific’s fall was likely a direct hit from the loss of traffic it will suffer as Teck Resources temporarily shuts its six Canadian coal mines.
The overall industrials group retreated 1.5 percent, while the financials group slipped 0.1 percent.
Among the three banks that reported on Thursday, Canadian Imperial Bank of Commerce (CM.TO) also raised its dividend, joining two of Canada’s Big Six banks that hiked their payouts earlier this week. CIBC (CM.TO) gained 0.6 percent to C$95.63.
While increased dividends will help banks win favor, the focus now is how they deal with higher interest rates, said John Ing, president of Maison Placements Canada.
“A lot of portfolio managers have been backing away from the banks,” he said. “For a long time it was a profitable trade but the outlook is a lot more difficult.”
Among the Big Six, only Bank of Nova Scotia (BNS.TO) is left to report quarterly earnings, on Friday.
With oil and gas stocks, another major component of the index, also lacking clear buy signals, Ing said he would not be surprised to see the benchmark index continue to fall in coming weeks.
Oil prices steadied on Thursday after a two-day slide as investors awaited data from the U.S. Energy Information Administration to see how U.S. oil production was responding to a recent surge in prices. [O/R]
Reporting by Alastair Sharp; Editing by Peter Galloway and James Dalgleish