Base metal miners lead broad retreat
TORONTO — Canada’s main stock index closed down Wednesday in a broad-based retreat led by base metal miners amid a fall in the copper price.
Metal prices were under pressure after reports that the U.S. administration would increase proposed tariffs from 10 per cent to 25 per cent on $200 billion worth of Chinese goods, said Michael Currie, vice-president and investment analyst at TD Wealth.
“We know Trump has talked about increasing some of the tariffs today, 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.”
The combined pressures, along with a hawkish tone from the U.S. Federal Reserve, helped to push the September copper contract down eight cents to close at $2.75 a pound.
Falling metal prices left the S&P/TSX capped materials index down 1.35 per cent as copper-focused Hudbay Minerals dropped 5.91 per cent, Turquoise Hill Resources dropped 4.99 per cent, and Teck Resources was down 4.63 per cent.
The Toronto Stock Exchange’s S&P/TSX composite index closed down 57.24 points at 16,376.77 as information technology, healthcare, and energy stocks also fell.
The energy index was down 0.44 per cent as the September crude contract closed down $1.10 at US$67.66 per barrel after U.S. stockpiles rose more than expected and OPEC production also increased more than expected.
In New York, the Dow Jones industrial average ended down 81.37 points at 25,333.82. The S&P 500 index closed down 2.93 points at 2,813.36 and the Nasdaq composite index ended up 35.50 points at 7,707.29.
The Dow fell as comments from the U.S. Federal Reserve indicated more rate hikes to come this year, even as it kept the rate unchanged, said Currie.
“They didn’t raise rates but it was perceived by the market as a bit hawkish, most of his comments were about a strong economy.”
The Nasdaq climbed as Apple beat sales expectations and rose sharply to hit an alltime high.
The Canadian dollar averaged 76.91 cents US, up 0.09 of a US 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 $6 at $1,227.60 an ounce and the September natural gas contract ended down two cents at US$2.76 per mmBTU.
Molson Coors Canada closed up $4.50, or 4.92 per cent, to $96.01 after announcing a joint venture with The Hydropothecary Corp. to develop non-alcoholic, cannabisinfused beverages. The new venture will be a standalone start-up with its own board and management team that will be 57.5 per cent owned by Molson.
Enercare Inc. closed up $9.99, or 52.83 per cent, to $28.90 after Brookfield Infrastructure Partners made a friendly $4.3-billion takeover offer for the utility, worth the equivalent of $29 per share in cash with an option to receive some of the price in equity. The offer was 53 per cent above Enercare’s closing price at $18.91 on Tuesday, prior to the announcement.