Canada’s main stock index closed down in a broad-based retreat led by base metal miners amid a fall in the price of copper.
Metal prices were under pressure after reports that the U.S. administration would increase proposed tariffs to 25% from 10% on US$200-billion worth of Chinese goods, said Michael Currie, vice president and investment analyst with TD Wealth Private Investment Advice.
“We know Trump has talked about increasing some of the tariffs today,” he said, “that is always a negative.”
The potential ramp-up in tariffs came a day after markets rallied on reports that China and the U.S. might ease tensions with new talks.
The spectre of increased tariffs comes as worries grow about China’s overall growth potential, said Currie.
“There seems to be some talk about fears that China growth is slowing, which always has a big effect on materials,” he said.
The combined pressures, along with a hawkish tone from the U.S. Federal Reserve Board, helped to push the September copper contract down by US8¢ to close at US$2.75 a pound.
Falling metal prices left the S&P/TSX capped materials index down by 1.4% as copper-focused Hudbay Minerals dropped by 5.9%, Turquoise Hill Resources dropped by 5%, and Teck Resources was down by 4.6%.
The Toronto Stock Exchange’s S&P/TSX composite index closed down by 57.24 points at 16,376.77 as information technology, health-care and energy stocks also fell.
The energy index was down by 0.4% as the September crude contract closed down by US$1.10 at US$67.66 a barrel after U.S. stockpiles and OPEC production rose more than expected.
In New York, the Dow Jones industrial average ended down by 81.37 points at 25,333.82. The S&P 500 composite index closed down by 2.93 points at 2,813.36 and the Nasdaq composite index ended up by 35.50 points at 7,707.29.
The Dow fell as comments from the Fed indicated more interest rate hikes to come this year, even as it kept the rate unchanged, said Currie.
“The [Fed] didn’t raise rates, but it was perceived by the market as a bit hawkish, most of [the] comments were about a strong economy,” he said.
The Nasdaq climbed as Apple Inc. beat sales expectations and rose sharply to hit an all-time high.
The Canadian dollar averaged US76.91¢, up 0.09 of a U.S. cent in a positive showing despite strength in the U.S. dollar, said Currie: “The Canadian dollar’s actually hanging in pretty steady today, it’s had some pretty steady gains in the last few days, so it’s holding on, which is a good sign for the Canadian dollar.”
The December gold contract closed down by US$6 at US$1,227.60 an ounce and the September natural gas contract ended down by US2¢ at US$2.76 per mmBTU.
Molson Coors Canada closed up by $4.50, or 4.9%, to $96.01 after announcing a joint venture with the Hydropothecary Corp. to develop non-alcoholic, cannabis-infused beverages. The new venture will be a standalone start-up with its own board and management team that will be 57.5% owned by Molson.
Enercare Inc. closed up $9.99, or 52.8%, to $28.90 after Brookfield Infrastructure Partners made a friendly $4.3-billion takeover offer for the utility, worth the equivalent of $29 a share in cash with an option to receive some of the price in equity. The offer was 53% above Enercare’s closing price at $18.91 on Tuesday, prior to the announcement.