TSX ends down, U.S. markets recover from early losses after Chinese tariff action - InfoNews

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TSX ends down, U.S. markets recover from early losses after Chinese tariff action

April 04, 2018 - 2:13 PM

Escalating promises of tariffs by the U.S. and China had markets open lower Wednesday, only for U.S. indexes to end the day with gains while the TSX stayed in the red.

The market oscillations come as investors try to determine whether the two countries will follow through on the threats of tariffs, said Kathryn Del Greco, vice president and investment advisor at TD Wealth.

"The number one concern to the market right now is the tariff negotiation tactic that seems to be back and forth, sort of like a game of ping pong, between China and the U.S., to see what really in effect is going to come to fruition.

"The market is trying to grapple with the seriousness, or the likelihood, of this actually being implemented, or is this just really the negotiation process that is going to ultimately lead to a better structured deal between these two countries."

U.S. President Donald Trump's administration laid out on Tuesday the US$50 billion worth of Chinese goods that could face tariffs, with China responding Wednesday with a list of U.S. goods that could face retaliatory tariffs including soybeans and aircraft.

Both sides have, however, given themselves room to manoeuvre, including comments from recently-appointed National Economic Council Director Larry Kudlow suggesting the U.S. tariffs won't be implemented if China lowers barriers to trade.

The openness to negotiations match strategies that are becoming hallmarks of the Trump administration, said Del Greco.

"Over the course of the last year, the Trump administration's tactics have been you know, perhaps to shoot a shot across the bow first, rattle a few people, and then back off the initial position."

The dispute threatens to spill out onto the global economy, both from general unpredictability and the potential knock-on effects from higher prices and inflation caused by the tariffs, said Del Greco.

"This global growth that we're experiencing right now, it's actually slated to grow by three per cent this year, which would be the strongest showing in seven years. So there's a lot riding on this, and we would hate to see that choked off. And Canada is a participant in that."

The uncertainty helped send the S&P/TSX composite index down 16.39 points to close at 15,164.37, led by declines in gold, materials, and health care sectors.

"Certainly, as we all know, if the U.S. catches a cold, Canada catches pneumonia. Whatever happens to the U.S. economy, is the tail that's wagging us," said Del Greco.

In New York, the Dow Jones industrial average closed up 230.94 points at 24,264.30. The S&P 500 index ended up 30.24 points at 2,644.69 and the Nasdaq composite index was up 100.83 points at 7,042.11.

The Canadian dollar averaged 78.07 cents US, up 0.02 of a US cent.

The May crude contract closed down 14 cents at US$63.37 per barrel and the May natural gas contract was up two cents at US$2.71 per mmBTU.

The June gold contract ended up US$2.90 at US$1,340.20 an ounce and the May copper contract was down five cents at US$3.01 a pound.

News from © The Canadian Press, 2018
The Canadian Press

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