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At midday: TSX rises as gains in financials soften trade war worries; Hydro One sinks

Canada’s main stock index rose on Thursday as gains in financial stocks downplayed concerns of escalating U.S.-China trade war, which had pushed markets to losses a day earlier.

The Toronto Stock Exchange’s S&P/TSX Composite index was up 130.16 points, or 0.79 per cent, at 16,547.48.

Nine of the index’s 11 major sectors were higher, led by the financials sector, which climbed 0.7 per cent.

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Top boosts to the financials were shares of Royal Bank of Canada, which rose 0.9 per cent and Brookfield Asset Management, which gained 1.7 per cent.

Shares of Hydro One dropped 4.2 per cent after the exit of CEO Mayo Schmidt and the company’s board following pressure from the new Conservative government in Ontario.

The Canadian dollar strengthened against its U.S. counterpart as investor appetite for risk recovered and after the Bank of Canada raised interest rates on Wednesday. The loonie was trading at 75.89 cents US.

The energy sector climbed 0.4 per cent as oil rose slightly after Libya said it would resume oil exports and the International Energy Agency said the world’s oil supply cushion “might be stretched to the limit” due to production losses.

Domestic data showed Canadian new home prices were unchanged in May for a third straight month, while another piece of data showed Canadian home prices rose in June.

On the NAFTA front, the next meeting on the agreement will likely take place in Washington during the last week of July, Mexican Economy Minister Ildefonso Guajardo said on Wednesday.

The tech sector gained 2.4 per cent and telecom stocks were up 1.4 per cent.

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Top gainers on the TSX were shares of Precision Drilling, which jumped 2.8 per cent.

Canopy Growth Co. rose 0.3 per cent after it entered a supply pact with a liquor distributor.

The most heavily traded shares by volume were Hydro One, Prometic Life Sciences and Trevali Mining.

U.S stocks gained on Thursday, led by marquee technology stocks hitting record highs and a rebound in industrial stocks, as optimism of a strong earnings season offset fears about a U.S-China trade war.

Facebook, Microsoft and Amazon hit all-time intraday highs and along with Apple and Alphabet powered the S&P 500 and Nasdaq higher.

The technology sector rose 1.3 per cent, leading the gainers among the 11 major S&P sectors. Industrials rose 1 per cent.

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CA Inc. jumped 18.1 per cent, the most on the S&P 500, after chipmaker Broadcom announced a surprise US$18.9-billion deal to buy the business software company. Broadcom slumped 16.8 per cent, leading S&P’s losers.

Boeing and Caterpillar, among the hardest hit by the recent trade dispute, rose about 1.3 per cent helping send the Dow Jones Industrial Average index higher.

Industrials led a slide on Wall Street on Wednesday after the U.S. threatened to impose tariffs on US$200-billion worth of Chinese goods. China said on Thursday the two countries have not been in touch about restarting talks and while it does not want a trade war, it would fight if necessary.

Weekly jobless claims hit a two-month low last week, the Labor Department said, in a sign that labor market conditions remained robust in early July.

The consumer price index (CPI) barely rose in June, but the underlying trend continued to point to a steady buildup of inflation pressure that could keep the Federal Reserve on a path of gradual interest rate increases.

“The markets are telling us the economy is good and the earnings are going to be okay, but there is that element of risk, and that is an elevating trade war,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “If trade fears continue to ease, then investors are going to be very much in tune to the earnings season and that could trigger a strong rally.”

The earnings season kicks off in earnest on Friday, starting with the big Wall Street banks, and overall S&P 500 companies are expected to post second-quarter profit growth of around 21 per cent, according to Thomson Reuters I/B/E/S.

However, the financial sector dropped 0.16 per cent, ahead of results from JPMorgan Chase, Wells Fargo and Citigroup.

The Dow Jones Industrial Average was up 207.45 points, or 0.84 per cent, at 24,907.90, the S&P 500 was up 19.54 points, or 0.7 per cent, at 2,793.56 and the Nasdaq Composite was up 82.14 points, or 1.06 per cent, at 7,798.75.

Netflix fell 2.1 per cent, the only decliner among the so-called ‘FAANG’ stocks, after UBS downgraded the stock on valuation concerns.

The brokerage said it does not expect to see “the pronounced upside to Q2 results vs. prior quarters” when Netflix reports results on Monday.

Delta Air Lines rose 1.1 per cent, and lifted other airline stocks, after the carrier’s quarterly profit topped estimates on higher average fares.

with files from Reuters

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