Skip to main content

Canadian stocks finished flat on Thursday after the United States moved to impose tariffs on metal imports from Canada, Mexico and the European Union, prompting retaliatory measures from some of its trading partners.

U.S. Commerce Secretary Wilbur Ross said a 25-per-cent tariff on steel imports and a 10-per-cent levy on aluminum imports from its allies would go into effect on Friday.

Mexico responded by imposing measures on U.S. farm and industrial products, targeting pork legs, apples, grapes and cheeses, as well as steel.

Canada said it would impose retaliatory tariffs on $12.8-billion worth of U.S. exports and challenge the steel and aluminum tariffs under the North American Free Trade Agreement and the World Trade Organization.

The Toronto Stock Exchange’s S&P/TSX composite index was up 12.84 points, or 0.08 per cent, at 16,061.50.

Shares of Stelco Holdings Inc., Canada’s only publicly traded steel producer, fell 3.5 per cent to the lowest in four weeks following Trump’s tariff announcement.

Leading the index were Canada Goose Holdings Inc, up 6.7 per cent, BRP Inc., up 5.8 per cent, and Birchcliff Energy Ltd , higher by 4.8 per cent.

Lagging shares were Sierra Wireless Inc., down 6.8 per cent, Superior Plus Corp., down 6.1 percent, and Descartes Systems Group Inc., lower by 4.3 percent

The Canadian dollar weakened against its U.S. counterpart on Thursday, reversing much of its gains from the day before, after data showed weaker-than-expected growth in the domestic economy and U.S. tariffs dented prospects for NAFTA trade pact talks.

The Canadian dollar was trading 0.7 per cent lower at $1.2960 to the greenback, or 77.16 U.S. cents.

The currency’s weakest level of the session was $1.2990, while it touched its strongest intraday since May 23 at $1.2819.

“Trump is willing to take short-term blows in order to negotiate more aggressive trade deals,” said Christian Lawrence, senior market strategist at Rabobank. “This doesn’t bode well for NAFTA negotiations.”

Canada sends about 75 per cent of its exports to the United States so its economy could be hurt if NAFTA is scrapped.

An uncertain trade outlook has been one source of worry for the Bank of Canada. But chances of a Canadian interest rate hike as soon as July were boosted on Wednesday by a more hawkish than expected policy statement from the central bank .

In New York, based on the latest available data, the Dow Jones Industrial Average fell 251.59 points, or 1.02 per cent, to 24,416.19, the S&P 500 lost 18.7 points, or 0.69 per cent, to 2,705.31 and the Nasdaq Composite dropped 20.34 points, or 0.27 per cent, to 7,442.12.

For the month, the three major indexes registered their biggest percentage gains since January

The S&P 500 Packaged Foods and Meats index dipped 2 per cent, with all its 11 components in the red. Kraft Heinz Co and Mondelez International Inc were the biggest drags on the index.

Friction between the United States and its trading partners has roiled financial markets since March, when U.S. President Donald Trump decided to impose the metal tariffs. Trade issues overshadowed economic data showing accelerated growth in U.S. consumer spending.

“The tariffs threw cold water over what might have been an OK day,” said Aaron Clark, portfolio manager at GW&K Investment Management in Boston. “As negotiation is done publicly, the news will whip around the market a bit, but in the end, it will probably work out.”

The S&P Composite 1500 Steel index gave up earlier gains after Mexico’s retaliation, though several of its constituents, including Nucor Corp and United States Steel Corp, were still in positive territory. The steel index was last down 0.1 per cent.

Shares of industrial giants Boeing Co and Caterpillar Inc slipped 1.7 per cent and 2.3 per cent, respectively.

Adding to the trade worries was a report that the United States aimed to target German carmakers, having launched a probe last week into car and truck imports.

The day’s biggest percentage gainer among the S&P 500’s major sectors was the technology index, which rose 0.1 per cent, helped by a 2.1-per-cent gain in shares of Alphabet Inc and a 2.2-per-cent rise in Facebook.

General Motors Co shares led the S&P 500 in percentage gains, rising 12.9 per cent after Japan’s SoftBank Group Corp said it would invest $2.25-billion in GM’s autonomous vehicle unit.

Dollar General Corp shares declined 9.4 per cent and Dollar Tree Inc shares dropped 14.3 per cent after both discount retailers missed Wall Street estimates for their quarterly same-store sales.

U.S. oil fell nearly 2 per cent on Thursday, despite a larger-than-expected decline in U.S. crude inventories, while global benchmark Brent was little changed, pushing the spread between the two to its widest in more than three years.

U.S. crude stockpiles fell 3.6 million barrels last week, the Energy Information Administration said, exceeding expectations for a decline of 525,000 barrels. Gasoline and diesel stocks rose, but the crude drawdown was a salve for recent losses in U.S. futures.

Brent crude losses were more limited, as the prospect that the Organization of the Petroleum Exporting Countries will bring its supply-cut deal to a close by the end of the year has had a greater effect on the U.S. benchmark due to ongoing worries about U.S. infrastructure constraints.

“The market is concerned that in the longer term increases in oil production combined with refining problems and limited outbound pipeline capacity,” said Andrew Lipow, president of Lipow Oil Associates in Houston.

U.S. crude production has been rising to record high levels since late last year. In March, it jumped 215,000 bpd to 10.47 million bpd, a new monthly record, the EIA said on Thursday.

Brent crude futures for August ended down 14 cents to $77.56 a barrel, while U.S. West Texas Intermediate July crude settled $1.17, or 1.7 per cent, lower at $67.04 a barrel.

At one point, the premium for Brent over WTI surpassed $11 a barrel, the largest spread since March 2015. That spread has doubled in less than a month, as a lack of pipeline capacity in the United States has trapped a lot of output inland.

“The Brent/WTI is blowing out. I think there must be what looks like some capitulation going on in the spread between those two contracts,” Saxo Bank senior manager Ole Hansen said.

The wider premium makes U.S. crude exports more competitive than those linked to the Brent price, such as North Sea or West African grades of oil.

Brent had hit a three-week low below $75 a barrel on Monday after OPEC and its allies, including Russia, indicated they could adjust their deal to curb supplies and increase production.

OPEC and non-OPEC producers have committed to cut output by 1.8 million bpd until the end of 2018 but are ready to make gradual supply adjustments to deal with shortages, a Gulf source familiar with Saudi thinking told Reuters late on Wednesday.

Reuters

Report an error

Editorial code of conduct

Tickers mentioned in this story