Trade fears push TSX off record high

Canada’s main stock index retreated from a record high Wednesday to close lower along with other North American markets Thursday.

Trade fears were once again top of mind for investors to help push down markets in general, though the retreat in the TSX was in part due to the peak reached a day earlier, said Kash Pashootan, CEO and chief investment officer at First Avenue Investment Counsel Inc.

“After the TSX’s performance yesterday with it cracking near-high levels, we’re simply viewing the hangover after the party the TSX had yesterday. That being said, there are real factors that are heightening the levels of volatility, and that’s primarily roots in trade war fears escalating.”

Tensions have been higher after the U.S. proposed another level of tariffs on $200 billion worth of Chinese goods late last week, to which China has promised to retaliate.

The European Union is set today to slap tariffs on $3.4 billion in American products, from whiskey and motorcycles to peanuts and cranberries. India and Turkey have already targeted U.S. products, from rice to autos to sunscreen. And in two weeks, the United States is to start taxing $34 billion in Chinese goods. Beijing has vowed to retaliate with its own tariffs on U.S. soybeans and other farm products in a direct shot at President Donald Trump’s supporters in America’s heartland.

Energy stocks were under pressure Thursday as investors expect OPEC to agree to a production increase at a meeting on Friday.

The increased supply from Saudi Arabia and elsewhere is expected to depress prices, though Pashootan said pipeline constraints are at least limiting supply expansion in the U.S.

Speculation on oil supplies pushed the August crude contract down 17 cents or 0.25 per cent to close at US$65.54 per barrel. Energy stocks fared worse though, as the S&P/TSX capped energy index was down 2.11 per cent on the day.

The drop in energy stocks helped push the S&P/TSX composite index down 85.80 points to close at 16,335.15. Mining stocks also retreated along with metal prices, while cannabis stocks sent the health-care index higher a day after Prime Minister Justin Trudeau announced the Oct. 17 legalization date for marijuana.

In New York, the Dow Jones industrial average closed down 196.10 points at 24,461.70. The S&P 500 index closed down 17.56 points at 2,749.76 and the Nasdaq composite index was down 68.56 points at 7,712.95.

The Canadian dollar averaged 75.13 cents US, down 0.05 of a US cent as it continues to feel the pressure of trade fears and rising interest rates in the U.S.

The August crude contract closed down 17 cents at US$65.54 per barrel and the July natural gas contract ended up one cent to US$2.98 per mmBTU.

The August gold contract ended down US$4 at US$1,270.50 an ounce and the July copper contract closed down two cents at US$3.02 a pound.