Growth worries hit stocks
TORONTO — North American markets fell on renewed fears about a global economic slowdown and difficulties in the U.S.-China trade deal negotiations.
Anxieties were heightened after the European Commission slashed its growth outlook for the euro zone to 1.3 per cent this year from 1.9 per cent in 2018, said Kash Pashootan, CEO and chief investment officer at First Avenue Investment Counsel.
Additionally, investor optimism about a Chinese trade deal evaporated when White House economic adviser Larry Kudlow said the world’s two largest economies were far away from striking a deal.
Reports also suggested that U.S. President Donald Trump was unlikely to meet Chinese President Xi Jinping before the March 1 deadline when the administration has threatened to raise tariffs to 25 per cent on $200 billion worth of Chinese goods.
Pashootan says markets could continue to fall in the coming sessions but he doesn’t believe it will match the deep sell off at the end of 2018.
Concerns about a global economic slowdown pushed crude oil prices down and caused Canada’s main stock index to reverse Wednesday’s gains.
The S&P/TSX composite index closed down 8.95 points to 15,703.36, after hitting an intraday low of 15,588.66.
The influential energy sector led the fall, losing 2.35 per cent as the March crude contract was down US$1.37 at US$52.64 per barrel and the March natural gas contract was down 11.1 cents at US$2.55 per mmBTU.
Crius Energy Trust was one of the biggest movers of the day, losing $2.02, or 36.86 per cent, to $7.50 on heavy trading. Canadian Natural Resources, Suncor Energy Inc., Imperial Oil, Enbridge Inc. and TransCanada Corp. all fell. Several Canadian banks saw their shares decline to offset the 3.3 per cent gain by Great-West Lifeco Inc. in the financials sector.
The health-care sector rose 1.5 per cent as cannabis producer Aurora Cannabis Inc. was up 3.21 per cent, while Aphria Inc. was down about one per cent.
The April gold contract was down 20 cents at US$1,314.20 an ounce and the March copper contract was up 0.80 of a cent at US$2.83 a pound.
The Canadian dollar fell to a two-week low by trading at an average of 75.27 cents US, compared with an average of 75.82 cents US on Wednesday.
American markets fared worse than the TSX with the Dow Jones industrial average losing 220.77 points at 25,169.53. The S&P 500 index was down 25.56 points at 2,706.05, while the Nasdaq composite was down 86.93 points at 7,288.35.
Pashootan said concern about a Chinese trade deal weighed more heavily in the U.S. and that trade played a larger role than slowing global economic growth because it’s a less frequent challenge seen by investors.
Canadian Natural Resources Ltd. says its partner in an deep water offshore drilling project in South Africa is reporting a “significant gas condensate” discovery. Kevin McLachlan, Total’s senior vice-president of exploration, said the discovery is “a new world-class gas and oil play,” adding the company and its partners plan to acquire 3D seismic scans this year, followed by up to four more exploration wells.