October was a month of nasty tricks and few treats for investors who were active in Canadian stock markets. Equities around the world came under selling pressure, but Canadian markets suffered more than most as cannabis stocks pulled back and the energy sector dealt with falling oil prices. The S&P/TSX Composite Index fell by 6.69 per cent, underperforming most of its global peers. Only 26 of the 94 international market indexes tracked by Bloomberg  fared worse.

Weakest sectors:

Health Care: - 18.6%

Energy: - 10.8%

Info Tech: - 7.1%

All 11 of the TSX index’s sectors lost ground in October. Health Care was the weakest performer, declining by 18.6 per cent. The pullback in marijuana stocks was a big factor with Aurora Cannabis (ACB.TO), Canopy Growth (WEED.TO) and Aphria (APH.TO) all falling sharply. However, the sector’s declines weren’t limited to marijuana. All eight companies in the health care index lost ground. Energy stocks also had a rough month, with that index falling 10.8 per cent. Early in October the price of oil hit a high point for the year – but then kept falling throughout the month. Info Tech was the third weakest performer, with Mitel Networks the only positive mover in the sector. Shares of Shopify and Blackberry both took double-digit percentage declines.   

Strongest sectors:

Consumer Staples: - 0.2%

Communication Services: -1.6%

Real Estate: - 2.6%

In declining markets, the prevailing wisdom is that investors should seek refuge in “defensive” stocks like utilities, consumer goods, real estate and telecom – and that was indeed the case in October. Consumer Staples almost managed a positive return, with grocers Empire (EMPa.TO) and Metro (MRU.TO) leading the way. Communication Services also held up well, with Rogers (RCIb.TO) and Cineplex (CGX.TO) posting narrow gains.

Weakest stocks:

Maxar Technologies (MAXR.TO): - 53.7%

Guyana Goldfields (GUY.TO): - 37.8%

Paramount Resources (POU.TO): - 36.4%

The month’s two weakest stocks were hit by specific negative news late in the month. On Oct. 30, Guyana Goldfields plunged 37 per cent after slashing its 2018 gold production forecast, prompting analysts at BMO and Scotiabank to downgrade their ratings. Similarly, Maxar Technologies dropped by more than 50 per cent  on Oct. 31 after its third-quarter profit fell short of even the lowest analyst estimates amid a continuing decline in its space systems business.   

Strongest stocks:

MEG Energy (MEG.TO): + 31.1%

Element Fleet Management (EFN.TO): + 16.5%

Barrick Gold (ABX.TO): + 15.4%

Shares of MEG Energy got off to a strong start at the beginning of the month following Husky Energy’s (HSE.TO) $6.4-billion takeover offer for the company, although its stock has pared back some of its gains. Element Fleet Management also began the month with a bang, announcing plans to improve customer service, wind down a troubled division, slash the dividend and raise $300-million in an equity offering – moves that led to a surge in the company’s shares. The  much-maligned gold sector accounted for Barrick Gold which benefitted from some company-specific news, as well as a bump in the price of bullion as equity markets sold off. Barrick shares rose as investors gave the thumbs up to its planned mega-merger with Jersey-based Randgold.