Resource stocks weigh on TSX, loonie slips

A rise in trade tensions after the U.S. released details of more planned tariffs against China helped send commodities and North American markets down Wednesday, while the loonie also slipped despite a rate hike by the Bank of Canada.

Markets reacted after the U.S. released a list of $200 billion US in Chinese goods that could be hit by tariffs, which China promised to retaliate against.

“This is certainly a heightened risk,” said Kathryn Del Greco, vice-president and investment adviser at TD Wealth.

“We have not, certainly in recent memory, been through a scenario where we have global trading partner tension increasing at the pace that we see.”

The trade tensions have investors and policy-makers concerned about how rising protectionism could affect global growth, which helped push down prices for commodities including crude and copper.

The concerns weren’t enough to stop Bank of Canada governor Stephen Poloz from raising the interest rate a quarterpoint to 1.5 per cent Wednesday, though he warned the economy should brace for larger impacts from mounting trade uncertainty.

The rise in the interest rate helped push the loonie up earlier in the day, but it averaged 76.04 cents US for a drop of 0.15 of a U.S. cent on the day because of trade tensions, said Del Greco.

Tensions also hit the S&P/TSX composite index, which closed down 131.40 points at 16417.32, after setting record highs earlier in the week.

Base metals led declines on the market with a 3.67 per cent drop for the index. The growth-linked copper price lost 10 cents to close at $2.74 US a pound for the September contract.

The S&P/TSX capped energy index slipped 1.66 per cent as a combination of trade tensions and a warning from OPEC of potential surplus supplies next year pushed the August crude contract down $3.73 to close at $70.38 US per barrel.

In New York, the Dow Jones industrial average ended down 219.21 points at 24700.45. The S&P 500 index closed down 19.82 points at 2,774.02 and the Nasdaq composite index was down 42.59 points at 7716.61.

The August natural gas contract ended up four cents at $2.83 US per mmBTU and the August gold contract closed down $11 at $1,244.40 US an ounce.

Canopy Growth closed up 84 cents or 2.2 per cent at $38.94 a day after the company said it would buy Hiku Brands Company Ltd., which owns the Tokyo Smoke cannabis retail brand.