Toronto’s main stock index plummeted more than 100 points before the long weekend as Canada and the U.S. failed to reach a trade agreement by President Donald Trump’s self-imposed deadline Friday.
The two countries met this week for a new round of NAFTA negotiations, hoping to strike a deal by the end of the week, but now it appears talks will continue after the Labour Day long weekend.
“With the events that we’re having with NAFTA, certainly having some pressure on the market,” said Sid Mokhtari, with CIBC Capital Markets.
The S&P/TSX composite index shed 108.67 points to 16,262.88.
“It’s certainly has a lot to do with the politics, and I don’t think it’s primarily anything fundamental at this point,” he said, referencing off-the-record comments made by Trump to Bloomberg News that were leaked to the Toronto Star newspaper and published Friday morning.
Trump, who has since confirmed the comments in a tweet, said that any deal with Canada would be “totally on our terms.”
Investors may assume the pending deal will not be a good one for Canada or not quite what the country is looking for, said Mokhtari.
Both countries have remained stubborn on certain issues and negotiations are expected to continue next week, starting Wednesday. Trump notified Congress that his administration intends to sign a trade agreement in 90 days with Mexico and Canada, should it be willing to do so.
The health care and information technology sectors were the only two on the TSX to close in the green and offset some of the losses on the index. Cannabis companies Aphria Inc. and Canopy Growth Corp. led the health care sector where shares gained 6.06% and 2.4% respectively.
The rhetoric also pushed down the Canadian dollar. The loonie closed lower at US76.60¢ compared with an average of US77.04¢ on Thursday.
In New York, the Dow Jones industrial average fell 22.10 points to 25,964.82. The S&P 500 index gained 0.39 points to 2,901.52, while the Nasdaq composite advanced 21.17 points to 8,109.54.
The October crude contract retreated US45¢ to US$69.80 per barrel and the October natural gas contract gained US4¢ to roughly US$2.92 per mmBTU.
The December gold contract rose US$1.70 to US$1,206.70 an ounce and the December copper contract declined about US5¢ to US$2.68 a pound.