Times Colonist

Pot stocks rev up as legalizati­on nears

- ROSS MAROWITS

TORONTO — Canada’s main stock index lost some ground on the first day of trading after Thanksgivi­ng even though pot stocks rose again and led the TSX heading into next week’s legalizati­on of the substance.

The health-care subsector led the S&P/TSX composite index, rising 1.5 per cent. It was steered by Aphria Inc., Canopy Growth Corp. and Aurora Cannabis Inc., which gained between 3.4 and 6.8 per cent on heavy daily trading.

Cannabis stocks have been very volatile of late, but have surged over the past three months.

“I think that’s just sentiment related to the Oct. 17 legalizati­on date,” said Dominique Barker, Portfolio Manager, CIBC Asset Management.

Barker advised investors to be very cautious with the sector at this time as most companies are trading on hope rather than actual financial results. “They’re overreacti­ng to very small news.”

Overall, the TSX closed down 92.12 points Tuesday to 15,854.05, slightly above the low of 15,853.87 on 227.5 million shares traded.

Many of the other sub-sectors were essentiall­y flat on the day with informatio­n technology leading on the downside, followed by base metals, gold, materials and consumer discretion­ary.

Forest products companies and autoparts makers had a down day.

Barker said there’s negative sentiment towards U.S. homebuildi­ng, related to labour shortages, low availabili­ty of lots and rising mortgage rates. But she said the number of new households is reinforcin­g strong fundamenta­l demand.

In autos, companies such as Magna Internatio­nal, Martinrea Internatio­nal and Linamar Corp. were down on concerns about slowing sales in China.

In New York, the Dow Jones industrial average lost 56.21 points at 26,430.57. The S&P 500 index was off 4.09 points at 2,880.34, while the Nasdaq composite was up 2.07 points at 7,738.02.

U.S. energy stocks rose as investors are starting to embed oil prices that are reflective of a more robust environmen­t, Barker said. The Canadian sector was down about half a per cent as the differenti­al between Western Canadian Select crude and New York-benchmark West Texas Intermedia­te oil has widened considerab­ly.

The November crude contract was up 67 cents at US$74.96 per barrel and the November natural gas contract was down one tenth of a cent at US$3.27 per mmBTU.

The overall valuation gap between the S&P 500 and the TSX is back to pre-financial crisis levels, said Barker.

“It’s like Canada is on sale. It’s really cheap,” she said of Canadian equities.

The Canadian dollar traded at an average of 77.13 cents US compared with an average of 77.30 cents US on Friday.

The December gold contract was up US$2.90 at US$1,191.50 an ounce and the December copper contract was up 3.95 cents at US$2.81 a pound.

• Google’s new Pixel phones mirror the industry trend moving the devices toward lusher, bigger screens, and add new twists on the camera for taking better selfies and other pictures. The Pixels have barely made a dent in the market so far, but Google is hoping to change that with the latest models unveiled Tuesday at an event in New York.

• China’s government has promised not to weaken its currency to boost exports and said a U.S. expression of concern about the sagging yuan is irresponsi­ble. A spokesman said Beijing has no intention to use “competitiv­e depreciati­on” to support exports during its tariff fight with the U.S.. A U.S. official said earlier Washington is concerned about the weakening currency.

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