North American markets fall on threats to Chinese and U.S. investments

The S&P/TSX composite index closed down 96.13 points at 16,694.27. It marked the first weekly decrease in five weeks and follows the setting of record highs several times last week. (Pixabay Photo)

TORONTO — North American stock markets sustained losses to end a poor week as uncertainty over the trade war resurfaced with American government threats to investments in the U.S. and China.

The movement followed reports that the U.S. administration is discussing limiting U.S. portfolio investments in China and delisting Chinese companies from U.S. stock exchanges.

Limiting investments just doesn’t sound good, says Les Stelmach, portfolio manager at Franklin Bissett Investment Management.

“It’s just further drum-beating on kind of this trade war thing which the market obviously doesn’t like,” he said in an interview.

The escalation in the trade war comes after the two sides made some conciliatory moves ahead of next week’s resumption of negotiations that gave observers hope for a deal.

“It just seems like posturing but it’s just this game of one-upsmanship that makes everybody nervous.”

Escalation of impeachment talk against U.S. President Donald Trump also had an impact on markets, along with concerns about a weaker Chinese economy, he added.

The S&P/TSX composite index closed down 96.13 points at 16,694.27. It marked the first weekly decrease in five weeks and follows the setting of record highs several times last week.

Nine of the 10 major sectors on the index ended the day lower, led by health care and materials.

Health care was down 2.2 per cent on lower share prices by several cannabis companies, including Canopy Growth Corp. and Aphria Inc., which were down by 3.9 and 3.5 per cent respectively.

Materials dropped 1.7 per cent with Kinross Gold Corp. falling 5.6 per cent on lower gold prices. However, First Quantum Minerals Ltd. rebounded from Thursday’s 10.5 per cent decrease by rising 4.4 per cent to end the week on higher copper prices.

The December gold contract was down US$8.80 at US$1,506.40 an ounce and the December copper contract was up two cents at US$2.60 a pound.

The energy sector was also lower as the International Energy Agency (IEA) said it could revise global oil demand lower this year and in 2020.

The November crude contract was down 50 cents at US$55.91 per barrel and the November natural gas contract was down 3.9 cents at US$2.40 per mmBTU.

Financials was the sole sector to rise, led by the Toronto-Dominion Bank and the Bank of Nova Scotia, which had heavy volume.

The Canadian dollar traded for an average of 75.48 cents US compared with an average of 75.41 cents US on Thursday.

In New York, the Dow Jones industrial average was down 70.87 points at 26,820.25. The S&P 500 index was down 15.83 points at 2,961.79, while the Nasdaq composite was down 91.03 points at 7,939.63.

Stelmach said the week was a bit of a setback from what has been a pretty good month with the TSX and the Dow Jones each up about 1.5 per cent so far.

“A bit of a more abysmal day overall in the markets but perhaps not surprising. It’s been a kind of two steps forward, one step back environment we’ve been in for awhile.”

This report by The Canadian Press was first published Sept. 27, 2019.

Companies in this story: (TSX:TD, TSX:BNS, TSX:FM, TSX:WEED, TSX:APHA, TSX:K, TSX:GSPTSE, TSX:CADUSD