Canada’s main stock index opened lower on Wednesday, weighed down by falling oil prices and escalating trade tensions between the United States and China, with a potential rate hike by the Bank of Canada also in focus.
The Toronto Stock Exchange’s S&P/TSX Composite index was down 95.05 points, or 0.57 per cent, at 16,453.67. The index closed at a record high on Tuesday on the back of rising oil prices.
The Canadian dollar was slightly higher trading at 76.42 cents US after the Bank of Canada raised its overnight rate target by a quarter of a percentage point to 1.5 per cent.
The biggest declining sectors included metals, materials, industrials and energy.
U.S. stocks opened lower on Wednesday, halting a four-day run of gains after the United States threatened to impose tariffs on an additional US$200-billion worth of Chinese goods.
The Dow Jones Industrial Average fell 158.91 points, or 0.64 per cent, to 24,760.75. The S&P 500 was lower by 14.70 points, or 0.53 per cent, at 2,779.14. The Nasdaq Composite dropped 44.61 points, or 0.57 per cent, to 7,714.59.
U.S. officials on Tuesday issued a list of thousands of Chinese imports that the Trump administration wants to target with new tariffs, including hundreds of food products, as well as tobacco, chemicals, coal, steel and aluminum.
China’s commerce ministry said it was “shocked” and would complain to the World Trade Organisation, but did not immediately say how it would retaliate.
“Unfortunately the markets haven’t come to grips with the current levels of trade policies and tariffs,” said Art Hogan, chief market strategist at B. Riley FBR in New York
“Concerns over trade and trade wars are really having an adverse effect, less so on the U.S. markets than the international markets, but it is certainly taking a bite.”
Global stocks were under pressure overnight, with Chinese markets taking the biggest hit. The Shanghai Composite index dropped 1.8 per cent and China’s blue-chip CSI300 index 1.7 per cent.
There is a two-month period of public comment on the latest proposed list before the tariffs get imposed. President Donald Trump has said he may ultimately target more than US$500-billion worth of Chinese goods - roughly the total amount of U.S. imports from China last year.
Among premarket decliners, Boeing, the single largest U.S. exporter to China, and Caterpillar fell around 1.5 per cent each, while U.S. Steel dropped 2 per cent.
Industrials and metal companies, as well as chipmakers have been the worst hit since Trump first threatened tariffs in early March as they are largely reliant on China for businesses.
Intel, Broadcom, Micron Technology, AMD and Nvidia were down between 0.8 per cent and 2.2 per cent.
The escalating trade war sparked a broad sell-off in premarket trading, including in “FAANG” shares, which are generally immune to trade-related news. Those stocks rebounded slightly after the open.
Facebook was up 0.05 per cent, Amazon was up 0.25 per cent, Netflix added 0.07 per cent, Alphabet was up 0.6 per cent, but Apple slid 0.63 per cent.
U.S.-listed shares of Chinese companies also tumbled, with e-commerce giant Alibaba down 1.85 per cent, JD.com off 1.4 per cent and Baidu 0.04 per cent.
Also weighing on the sentiment was the two-day NATO summit in Brussels where Trump wants Europeans to pay more for their own defense. Hogan said the meeting had already started on a “sour note.”
TripAdvisor’s shares rose 3.4 per cent after Barclays upgraded the stock to “overweight” rating.
With files from Reuters