U.S., China trade spat slams stocks

TORONTO — The renewed prospect of a trade war between the United States and China caused American stock markets to slump on Monday, but Canada’s main stock index diverged by closing higher after getting a boost from gold, materials and the cannabis-heavy health-care sectors.

Rumours about the Coca Cola Company being interested in talks with Aurora Cannabis Inc. to develop pot-infused drinks caused a halo effect for the country’s cannabis sector, said Craig Fehr, Canadian markets strategist for Edward Jones.

The S&P/TSX composite index was up 68.82 points to 16,082.31, after reaching a high of 16,117.95 on 222.7 million shares traded.

The health-care sector led by gaining 4.58 per cent on the day as Aurora Cannabis gained nearly 17 per cent and Canopy Growth Corp. was in positive territory.

“The lift in gold prices and the lift in the health-care sector domestically is kind of carrying the day for the TSX,” Fehr said in an interview.

While uncertainty over NAFTA talks have affected markets and the Canadian dollar in the past, the focus Monday was on uncertainty over relations between the world’s two largest economies.

“Those trade tensions for today are centred on the U.S. and China. As we progress not only through this week but over the next coming weeks I think that the conversation for the domestic markets is really going to centre around any progress or lack thereof with NAFTA talks,” he said.

Investors reacted the Trump administration preparing to impose tariffs on another $200 billion worth of Chinese goods.

In New York, the Dow Jones was down 92.55 points to 26,062.12. The S&P 500 index was down 16.18 points to 2,888.80, while the Nasdaq was down 114.25 points to 7,895.79.

“We’re still a long, long way away from this being officially a trade war, but clearly in terms of some of the rhetoric in the news about potential tariffs being a negotiating tactic we’re starting to see that the U.S. and China are calling each other’s bluff to an extent and we’re inching closer to potentially slightly larger tariffs on a bigger pool of goods,” said Fehr.

Technology stocks also moved lower as they often do whenever the mood around the international environment sours.

The Canadian dollar averaged traded at an average of 76.81 cents US compared with an average of 76.73 cents US Friday.

The October crude contract was down eight cents at US$68.91 per barrel.

“Any time we’re talking about potential disruptions to global economic activity and global trade we’re going to see a commodity like crude oil bear the brunt of that, but relatively modest declines today,” said Fehr.

The October natural gas contract was up 4.7 cents at US$2.814 per mmBTU.

The December gold contract was up US$4.70 at US$1,205.80 an ounce and the December copper contract was up a half of a cent at US$2.651 a pound.

Meanwhile, DowDuPont has named the chief executives who will lead its agriculture and specialty products businesses once they’re split off from the company.

The chemical giants Dow and DuPont merged last year in a deal valued at close to $70 billion, with plans to then split into three distinct companies.

The company said James Collins, the chief operating officer at DowDuPont’s agriculture unit, will lead Corteva Agriscience. Marc Doyle, the COO for the specialty products division, will become CEO of DuPont. Both companies will be based in Wilmington, Delaware. Ed Breen, the CEO of DuPont, will become executive chairman at the company after the separation.

Jim Fitterling has already been picked to lead Dow, the materials science division.