Canadian Stock Index Falls Amid Escalation In US Trade War

(RTTNews) - Canadian stocks turned lower on Friday as US President Donald Trump suddenly intensified his tariff pressure on Canada.

After opening below yesterday's record high levels, the benchmark S&P/TSX Composite Index moved lower and after swinging until post noon, managed to settle at 27,023.25, down by 59.05 (or 0.22 %).

Yesterday, the index closed at a new record high of 27,082.30.

Blaming Canada for failing to check illicit drug entry via Canadian borders into the US, Trump announced plans to impose a 35% levy on imports from Canada starting next month. It is an increase from the current 25% imposed in March. He also added that any counter-tariff by Canada will be met by re-imposing the same number on Canada over and top of the 35%.

Canadian PM Mark Carney has stated in response that Canada would continue to defend workers and businesses even as it continues negotiations with the US ahead of the August 1 deadline.

Last month, at the end of G7 Summit in Alberta, Carney had stated that both nations are negotiating to settle on a trade deal by July 21. Though the details of the discussion have not been revealed so far, investors were confident of a good trade deal between the two nations, which would end the tariff war.

In this backdrop, Canadian stocks traded in the positive territory this week and hit a new record high yesterday.

However, this new tariff announcement by Trump rattled today's market, with financial and export-reliant sectors suffering more.

Jobs data released by Statistics Canada today revealed that the unemployment rate eased to 6.9% in June from 7% in the previous month. Total employment grew by 83,100 jobs.

Labor Force Participation Rate increased to 65.40% in June from 65.30% in May.

In addition, month-on-month building permits increased to 12% in May.

The Bank of Canada will be parsing these numbers as it prepares for an interest rate decision on July 30. Analysts feel that a rate cut is unlikely considering the positive employment numbers.

Even this robust data set was insufficient today to offset the trade-war headwinds weighing on Canadian equities.

Economists feel that though investors are getting de-sensitized to the volley of tariffs springing from the US, the concern that this trade war may not end soon forces them to consider non-riskier assets.

Major sectors that gained in today's trading were Energy (1.21%), Materials (0.93%), Communication Services (0.25%), and Real Estate (0.20%).

Among the individual stocks, Kelt Exploration Ltd (3.93%), Advantage Oil & Gas Ltd (2.41%), Aya Gold and Silver Inc (9.25%), and First Majestic Silver Corp (7.36%) were the prominent gainers.

Major sectors that lost in today's trading were Financials (0.56%), Consumer Staples (0.89%), Healthcare (1.20%), and IT (1.62%).

Among the individual stocks, Bausch Health (3.41%), Dye & Durham Ltd (4.72%), Enghouse Systems Ltd (4.13%), and George Weston Limited (0.90%) were the notable losers.