Canada’s main stock index slipped on Wednesday, as energy stocks declined in tandem with a fall in oil prices and uncertainty around trade talks persisted.
At 11:30 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 75.57 points, or 0.47 per cent, at 16,085.73. At current levels, the index is looking at fourth consecutive session of declines.
The Bank of Canada maintained interest rates at 1.50 per cent as expected and reiterated that while more hikes would be needed to keep inflation on target, it would take a gradual approach.
Trade was also in focus as Canada heads into talks in Washington to renew NAFTA determined not to back down on key issues despite threats from U.S. President Donald Trump to retaliate against the Canadian economy unless Ottawa gives ground quickly.
Nine of the index’s 11 major sectors were in the red, led by the 1.4-per-cent drop in the energy sector.
The biggest lags on the energy index were TransCanada Corp., Suncor Energy Inc. and Canadian Natural Resources Ltd., which all fell about 1 per cent.
The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.5 per cent and was the second-biggest drag on the TSX.
Shares of First Quantum Minerals Ltd. fell 1.7 per cent and weighed the most on the materials group.
The largest percentage gainer on the TSX was gold and copper miner Nevsun Resources, which jumped 17.2 per cent on a $1.86-billion buyout from China’s Zijin Mining Group Co.
Shawcor Ltd fell 4.1 per cent and Precision Drilling dropped 6.5 per cent decline after TD Securities downgraded both the stocks.
Stock markets around the world fell on Wednesday and declines in emerging markets accelerated as a deadline in the U.S.-China trade conflict loomed and U.S.-Canada trade talks were due to resume.
Weakness in emerging market currencies helped support the dollar, even as sterling rebounded off a two-week low on hopes of a breakthrough in Brexit talks. That optimism came after a Bloomberg report said Britain and Germany were prepared to drop a key sticking point in the Brexit negotiations.
U.S Treasury prices gained slightly as emerging market stock weakness boosted demand for low risk U.S. government debt, though pressure from a heavy corporate debt supply calendar limited gains.
A public comment period on the possibility of fresh U.S. tariffs on another $200-billion of Chinese goods ends on Thursday, with expectations that the additional levies will be imposed by U.S. President Donald Trump.
The United States and Canada will also resume discussions on Wednesday on revamping the North American Free Trade Agreement (NAFTA). Ottawa is not expected to back down on key issues despite Trump’s threats to retaliate.
“There’s still a cloud hanging over the market about whether we are actually going to see these (Chinese) tariffs take effect by the end of this week and continued concerns about the NAFTA deal,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Fla.
The Dow Jones Industrial Average fell 9.67 points, or 0.04 per cent, to 25,942.81, the S&P 500 lost 13.95 points, or 0.48 per cent, to 2,882.77 and the Nasdaq Composite dropped 109.57 points, or 1.35 per cent, to 7,981.68.
The pan-European FTSEurofirst 300 index lost 0.98 percent and MSCI’s gauge of stocks across the globe shed 0.71 percent.
In Asia, expectations of U.S. tariffs sent the Shanghai SE Composite index down 1.7 per cent.
Emerging market stocks lost 1.73 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.8 per cent lower, while Japan’s Nikkei lost 0.51 per cent.
Emerging market currencies showed a second day of declines, with a JPMorgan emerging market currency index falling 0.3 per cent.
Sterling was last trading at $1.2897, up 0.33 per cent on the day.
Measured against a basket of currencies, the dollar index fell 0.19 per cent, with the euro up 0.26 per cent to $1.1611.
“Until last month, people were focusing on U.S. company earnings but now they are looking closely at what’s happening in emerging markets, at the trade war and the fact that the United States is likely to implement another wave of tariffs against China,” said Christoph Barraud, an economist at Paris-based brokerage Market Securities.
“If you look at global growth, more and more signs are that it will slow in coming months.”
Oil prices fell about 1 per cent on Wednesday after a U.S. Gulf storm weakened and moved away from oil-producing areas, and on mounting concerns about global trade disputes and Turkey’s currency crisis hurting demand.
U.S. West Texas Intermediate (WTI) crude futures fell 69 cents to $69.18 a barrel.
Brent crude fell 58 cents to $77.59 a barrel. The global benchmark had climbed in the previous session to $79.72 a barrel, its highest since May.
Crude jumped on Tuesday as oil companies shut dozens of offshore platforms in anticipation of damage from Tropical Storm Gordon. The storm, however, never became a hurricane and by Wednesday energy companies and port operators along the U.S. Gulf Coast took steps to resume operations.
The storm “appears to have bypassed major crude production alleys as well as the Gulf coast refining infrastructure,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Oil also weakened as the United States-China trade dispute raised demand worries. Trump could impose levies on $200 billion more of Chinese imports after a public comment period on the new tariffs ends on Thursday.
OPEC Secretary-General Mohammad Barkindo said global trade disputes could hurt energy demand in the future.
Also weighing on crude futures was a currency crisis in Turkey. The lira has fallen more than 40 percent this year .
“Fears of Turkey’s currency crisis spreading to other emerging markets have prompted demand-side concerns,” said Abhishek Kumar, senior energy analyst at Interfax Energy.
Reuters