Canada’s main stock index fell 1% on Wednesday, with most of the damage done by an influential short-seller’s accusations that Valeant Pharmaceuticals International Inc artificially inflates its revenue.
The S&P/TSX composite index fell 137.73 points to end Wednesday at 13,704.19
The Canadian dollar paled 0.92 cents at 76.13 cents U.S.
Valeant ended down 19.2%at $154.21 after falling as much as 40% in the session, after short-seller Citron Research released a report critical about the company.
Citron alleged that Valeant’s previously undisclosed ties to specialty pharmacies, including Philidor and R&O Pharmacy Inc, helped the company create "phantom sales" of its products or push more product through distribution channels than sales would warrant.
Valeant said in response that it does not record sales of drugs that are stocked as inventory at such pharmacies in its consolidated financial reports.
Gold stocks also were in retreat, most notably Barrick Gold, off 4.1%, to $9.84.
Metals and mining stocks proved the heroes of the day, led by First Quantum Minerals, soaring 4.1% to $7.20, and Teck Resources, gaining 3.6% to $8.36.
Among telecoms, Rogers Communications took on 1.1% to $49.68. In the consumer staples field, Premium Brands grew 1.9% to $35.32.
The Bank of Canada Wednesday stayed put with its benchmark interest rate of 0.5%.
ON BAYSTREET
The TSX Venture Exchange dropped 6.36 points Wednesday to 544.44
Eight of the 13 TSX subgroups were lower, mostly owing to health-care, down 5.5%, while gold stepped back 2.1%, and materials were
off 1.3%.
The five gainers were led by metals and mining, up 2.1%, while consumer staples and telecoms each moved up 0.5%.
ON WALLSTREET
U.S. stocks closed lower Wednesday, as investors took in fresh corporate earnings.
The Dow Jones industrial average capsized 48.5 points to 17,168.61, led lower by Goldman Sachs and with United Technologies leading advancers.
The S&P 500 moved lower 11.03 points to 2,019.74, with energy leading nine sectors lower and industrials the only advancer.
The NASDAQ index stumbled 39.18 points to 4,841.79
United Technologies closed up 2.5%, while Boeing ended 1.7% higher. Goldman closed down 3.1% and UnitedHealth fell 1.9%
Other companies that posted quarterly results Wednesday included Coca-Cola and General Motors. GM beat expectations on both earnings and revenue, but Coca-Cola sales fell short of estimates.
Shares of GM rose closed up 5.8% after rising over 6.5%, while Coca-Cola's stock traded slightly lower.
Firms scheduled to report after the bell include American Express, eBay and Raymond James.
Valeant Pharmaceuticals plunged as much as 28% after the release of a short-seller note on the company.
In corporate news, Ferrari opened for trading at $60 U.S. a share, about 15% above its $52 pricing.
SanDisk will be bought by Western Digital for $86.50 U.S. a share in cash and stock, or $19 billion.
Morgan Stanley downgraded Twitter's stock to "underweight" from "equal-weight," citing limited user growth and a lack of advertiser demand growth.
Toyota will recall 6.5 million vehicles to fix a power window defect, and another two million will be recalled for a potential fire hazard.
Investors also digested U.S. Energy Information Administration oil inventories data, which showed inventories rise by eight million barrels, as U.S. crude prices have fallen over 4.5% this week.
Prices for 10-year U.S. Treasuries strengthened, dropping yields to 2.03% from Tuesday’s 2.07%. Treasury prices and yields move in opposite directions.
Oil prices sank $1.05 a barrel to $45.24 U.S.
Gold prices fell $8.81 to $1,167.23 U.S. an ounce.
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