A major global stock index rose slightly on Wednesday after three straight days of strong gains as investors braced for news on the United States’ trade relations with Canada and China.
Talks to renew the North American Free Trade Agreement (NAFTA) hinge on Canada after Monday’s deal between the other parties to that pact, the United States and Mexico.
Investors are also nervous ahead of a deadline for the next round of China-U.S. tariffs next week.
MSCI’s world equity index, which tracks shares in 47 countries, ticked up 0.2 per cent. The index closed higher on Tuesday but off the 5-1/2-month high hit soon after Mexico and the United States struck their deal.
At 11:31 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 75.36 points, or 0.45 per cent, at 16,430.50.
Eight of the index’s 11 major sectors were higher led by a 3.3-per-cent rise in the healthcare sector.
Cannabis stocks gained after Tilray Inc reported quarterly results for first time as publicly traded company.
Aurora Cannabis Inc., Aphria Inc. and Canopy Growth Corp. rose between 5.2 and 8 per cent and were the most heavily traded shares by volume on TSX.
The energy sector climbed 0.8 per cent as U.S. crude prices were up.
The heavyweight financials sector fell 0.4 percent despite a 1-per-cent decline for Bank of Nova Scotia.
In New York, the Dow Jones Industrial Average was up 23.13 points at 26,087.15. the S&P 500 index was up 10.51 points at 2,908.03, while the Nasdaq Composite was up 54.30 points at 8,084.34.
“The market is quite right to say after the knee-jerk reaction higher in the Mexican peso and equities, a) there was remarkably little detail, and b) what is the state of Canada?” said Aberdeen Standard Investments head of global strategy Andrew Milligan.
U.S. President Donald Trump threatened to proceed with Mexico alone and levy tariffs on Canada if it does not come on board with revised trade terms. But a trade deal might struggle to win approval from Congress unless Canada comes on board.
“The final decisions are unlikely until 2019 at the earliest,” Goldman Sachs analysts wrote in a note to clients, saying Democrats might gain control of the majority in Congress by then, which could make agreement more difficult.
The dollar, which has been a safe haven from trade concerns, turned negative after earlier gains. An index of the U.S. currency against several trading partners fell 0.08 per cent. The Mexican peso lost 0.11 per cent versus the U.S. dollar, while the Canadian dollar ticked down 0.09 per cent versus the greenback.
On another front of the global trade conflicts, a deadline for public comment on Trump’s increased tariffs on $200 billion of Chinese goods was less than a week away on Sept. 5. The White House has said it wants to settle NAFTA before negotiating with China.
“There’s a big debate taking place among investors: is Trump hoping to reach agreement with all the big players to demonstrate what a successful negotiator he is, or is he trying to make sure he’s got agreement with NAFTA and the EU and therefore can turn all the firepower on to China?” said Milligan.
Emerging market stocks under pressure from trade concerns and a stronger dollar this year lost 0.10 percent on Wednesday, while an index of their currencies fell 0.37 per cent in dollar terms.
Turkey’s lira extended losses to a two-week low, down 1.89 percent against the dollar, as concern grew about the effects of the country’s currency crisis, and Finance Minister Berat Albayrak was quoted as saying he did not see a risk to the economy. Dollar-denominated Turkish bank bonds also fell after Moody’s sounded the alarm over the sector.
Oil prices rose on news of a fall in Iranian crude supplies as U.S. sanctions deter buyers. Brent was last at $76.31, up 0.47 per cent on the day.