NAFTA worries a drag on both TSX, loonie

TORONTO — The Canadian dollar and the Toronto stock index fell Wednesday amid reports that the United States might soon announce its intention to pull out of the North American Free Trade Agreement.

The loonie closed at an average trading price of 80.03 cents US, down 0.27 of a U.S. cent.

The S&P/TSX composite index lost 71.29 points to 16247.95, with industrials among the main decliners.

“That’s the sector that’s getting hit the most this afternoon because of the NAFTA news,” said Anish Chopra, managing director with Portfolio Management Corp. in Toronto. “You’ve got the auto-parts companies in that area.”

Separate reports from Reuters and Bloomberg said Wednesday that two Canadian government sources believe it’s increasingly likely that U.S. President Donald Trump will give six-months’ notice to withdraw from NAFTA in late January.

With the exception of metals and materials, few sectors on the commodity heavy TSX finished the day out of the red, as the February gold contract gained $5.60 to $1,319.30 US an ounce.

“The markets sold off this afternoon on the NAFTA news, and that’s really been a driver of performance later in the day,” Chopra said.

Even rising oil prices — the February crude contract was up 61 cents to $63.57 US per barrel, its highest level since Dec. 9, 2014 — couldn’t prevent energy stocks from losing ground.

“That would be unusual given the change in price of the commodity,” Chopra said. “I think it’s in sympathy of just trying to understand what’s going on with NAFTA. … You don’t know if it’s actually going to happen or if it’s a negotiating tactic.”

South of the border, U.S. stock indices pulled back from their record-setting pace.

On Wall Street, the Dow Jones industrial average dropped 16.67 points to 25369.13. The S&P 500 index edged back 3.06 points to 2748.23 and the Nasdaq composite index was down 10.01 points to 7153.57.

Elsewhere in commodities, the February natural gas contract was down two cents to $2.91 US per mm BTU and the March copper contract added two cents to $3.24 US a pound.