Canada’s main stock index fell on Tuesday, hurt by a slide in energy and financial sectors amid heightened trade tensions between the United States and China.
The Toronto Stock Exchange’s S&P/TSX Composite index was down 122.17 points, or 0.75 per cent, at 16,149.49.
Nine of the index’s 11 major sectors were lower, with energy stocks falling the most.
The energy sector tumbled 2.6 per cent, while financials slipped 1.2 per cent.
The trade war between the world’s top economies remained close to boiling point in the past two sessions and have roiled global financial stocks after China let the onshore yuan break through the key 7 per dollar level for the first time since the global financial crisis.
The tensions did, however, ease globally when China’s central bank fixed the yuan at a slightly stronger rate.
The materials sector added 1.3 per cent and was the sole gainer among major sectors as gold prices held near a six-year high.
Leading the index were Yamana Gold Inc., up 9.1 per cent, Aurora Cannabis Inc., up 7.9 per cent, and Kirkland Lake Gold Ltd., higher by 6.6 per cent.
Lagging shares were Ensign Energy Services Inc., down 9.1 per cent, Seven Generations Energy Ltd., down 8.7 per cent, and SNC-Lavalin Group Inc., lower by 8.1 per cent.
World stock markets inched higher on Tuesday, propelled by solid gains on Wall Street, after China’s central bank stepped in to stabilize the yuan, soothing fears that a protracted trade spat between the United States and China would spill over into a currency war.
Global markets had suffered a rout on Monday after China let the yuan fall below the 7 to the dollar level for the first time in more than a decade, spurring the United States to label Beijing a currency manipulator.
On Tuesday safe-haven assets, including bonds, gold and currencies like the yen and Swiss franc, dipped as investors moved tentatively back into the euro, sterling and some emerging-market currencies. Yet investor sentiment remained fragile.
“I think the tipping point for a more prolonged negative trend (for risk assets) is quite close,” said Hans Peterson, SEB Investment Management’s head of asset allocation.
On Wall Street, the Dow Jones Industrial Average rose 311.78 points, or 1.21 per cent, to 26,029.52, the S&P 500 gained 37.03 points, or 1.30 per cent, to 2,881.77 and the Nasdaq Composite added 107.23 points, or 1.39 per cent, to 7,833.27.
The pan-European STOXX 600 index lost 0.47 per cent and MSCI’s broad gauge of stocks across the globe gained 0.50 per cent.
U.S. President Donald Trump and Treasury Secretary Steven Mnuchin said on Monday China was manipulating its currency, and that Washington would engage the International Monetary Fund to clamp down on Beijing.
“Officially labeling China a currency manipulator gives the United States a legitimate reason to take even more steps,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. “The markets are now scrambling to factor in the possibility of the United States imposing not only an additional 10 per cent of tariffs on Chinese imports, but the figure being raised to 25 per cent.”
Goldman Sachs said it no longer expects a trade deal to be struck before the November 2020 U.S. presidential election. Morgan Stanley said more tit-for-tat tariffs could tip the world economy into recession by the middle of next year.
Though U.S. Treasury yields edged back up to 1.74 per cent from October 2016 lows of 1.672 per cent, German yields stayed down at minus 0.54 per cent. Markets are now pricing in a 100 per cent chance the European Central Bank will cut its already negative interest rates again next month.
China’s offshore yuan stretched the previous day’s slide, briefly weakening to 7.1382, the lowest level since international trading in the Chinese currency began in 2010. But it pulled back to 7.0469 after Beijing’s firmer-than-expected fixing on Tuesday.
The Japanese yen touched a seven-month high of 105.520 per dollar before dropping back as far as 106.700 in volatile trade.
Oil prices slipped near seven-month lows as the trade tensions between the United States and China intensified worries about slowing global demand. Brent crude oil futures fell 1.3 per cent to $59.06 per barrel, while U.S. crude dipped 1.7 per cent to $53.74.
Spot gold stalled after advancing to a six-year peak of $1,474.80 an ounce.