Canada’s main stock index slipped on Tuesday in a broad decline due to weak sentiment after the country failed on Friday to reach a deal with the United States to revamp the North American Free Trade Agreement.
U.S. President Donald Trump said on Saturday there was no need to keep Canada in the NAFTA and warned Congress not to meddle with the trade negotiations or he would terminate the trilateral trade pact altogether.
The financials slipped 0.3 per cent and was the biggest drag on the main index. Bank of Nova Scotia, Royal Bank of Canada and Toronto-Dominion Bank fell between 0.4 per cent and 0.8 per cent. Laurentian Bank of Canada dropped 4.2 per cent.
The Canadian dollar weakened to a six-week low against its U.S. counterpart on Tuesday amid an uncertain outlook for Canada’s trading arrangement with the United States and ahead of an interest rate decision this week by the Bank of Canada.
At 11:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 86.78 points, or 0.53 per cent, at 16,175.88.
Ten of the index’s 11 major sectors were in the red. The materials sector, led the fall with a 1.9-per-cent drop.
Gold futures fell 0.6 per cent to $1,193 an ounce, while copper prices declined 2.6 per cent to $5,814 a tonne.
The largest percentage gainers and most heavily traded stocks on the TSX were cannabis companies. Canopy Growth Corp. jumped 9.8 per cent and Aphria Inc rose 7.8 per cent.
Tahoe Resources fell 18.3 per cent, the most on the TSX, after Guatemala’s highest court upheld the suspension of licenses at Tahoe’s Escobal mine, one of the world’s biggest silver mines, and at the company’s smaller Juan Bosco mine.
U.S. stocks were lower on Tuesday, with declines in Facebook, internet stocks and Nike leading to a bumpy start to September, as investors also grappled with rising trade uncertainties.
Facebook fell 2.5 per cent after brokerage MoffettNathanson downgraded the social media giant to “neutral”, citing revenue growth deceleration.
Other internet stocks Alphabet, Twitter, Snap fell between 1 per cent and 2.4 per cent, while the S&P technology index dropped 0.3 per cent.
Nike dropped 2.7 per cent as the company faced backlash over its choice of Colin Kaepernick, the first NFL player to kneel during the national anthem as a protest against racism, as a face for the 30th anniversary of its “Just Do It” slogan.
The losses came after a strong August for the main U.S. indexes despite rising concerns over trade.
“Since August was a good month for stocks, we are seeing some profit-taking and the headlines on China negotiations seem to be weighing a little bit as well,” said Sean O’Hara, president of Pacer ETFs in Paoli, Pennsylvania.
Helping curb losses was Amazon.com, whose shares rose 1.8 per cent in their seventh straight day of gains, hitting yet another record and joining Apple in the $1 trillion market cap club.
The public comment period on a U.S. proposal for new tariffs on Chinese goods is set to end on Sept. 5, after which U.S. President Donald Trump can follow through on plans to impose levies on $200 billion more of Chinese imports, though it is unclear how quickly that will happen.
Talks between Canada and the United States to renegotiate the North American Free Trade Agreement (NAFTA) ended on a sour note on Friday, but officials set plans to resume their talks on Wednesday.
The Dow Jones Industrial Average was down 63.75 points, or 0.25 per cent, at 25,901.07, the S&P 500 was down 6.52 points, or 0.22 per cent, at 2,895.00 and the Nasdaq Composite was down 19.93 points, or 0.25 per cent, at 8,089.61.
“This is not an enormous move, seems like day-to-day volatility for September,” O’Hara said.
The indexes pared losses after data from the Institute for Supply Management showed U.S. manufacturing activity accelerated to more than a 14-year high in August, boosted by a surge in new orders.
Six of the 11 major S&P 500 sectors were lower, led by a 1.12-per-cent drop in the telecom sector.
Verizon fell 2 per cent after Barclays downgraded the wireless carrier’s stock.
Advanced Micro Devices gained 7.6 per cent and Qualcomm was up 2.6 per cent after brokerages upgraded the chip stocks.
Reuters