North American stocks fall amid U.S.-China tariff threats, loonie lower
A man watches the financial numbers at the TMX Group in Toronto's financial district, May 9, 2014. (Darren Calabrese/The Canadian Press)
Ian Bickis, The Canadian Press
Published Tuesday, June 19, 2018 2:54AM EDT
Last Updated Tuesday, June 19, 2018 5:19PM EDT
North American stock markets closed lower as U.S. President Donald Trump stoked more trade fears with a threat to impose tariffs on another $200 billion in imports from China, which said it would retaliate.
The escalating tension on trade sent European and Asian markets lower as well, while growth-linked commodities like copper and crude fell.
"There's definitely some element of pressure here as we go through the trade war fears, as well as the rhetoric for tariffs," said Sid Mokhtari, executive director of institutional equity research at CIBC.
The dip in commodities included the August crude contract closing down 79 cents at US$64.90 per barrel and the July copper contract ending down six cents at US$3.05 a pound.
The retreat is a symptom of recent escalations but the fundamental story of global growth and reflation are still true, said Mokhtari.
Commodities have also suffered because of the rising U.S. dollar following the Federal Reserve's decision to raise rates last week, he said.
"We're seeing US dollar strength, which has had net negative effects on cyclical commodities, and you're seeing that pressure reflected in the stocks."
The S&P/TSX composite index closed down 67.10 points at 16,316.53, led by losses in the base metal sector.
In New York, the Dow Jones industrial average ended down 287.26 points at 24,700.21. The S&P 500 index closed down 11.16 points at 2,762.59 and the Nasdaq composite index was down 21.44 points at 7,725.59.
Smaller, more U.S. focused stocks were doing better than more internationally-focused U.S. stocks, said Mokhtari.
The Canadian dollar averaged 75.32 cents US, down 0.39 of a US cent, as it continues to face the twin pressures of rising U.S. rates and trade fears, especially related to NAFTA.
"It's a confluence of trade fears and trade assumptions, as well as the Fed decision that happened last week," said Mokhtari.
He said the Canadian dollar could keep falling to somewhere around 73 cents as pressure persists.
'We still see follow-through weakness for the C-dollar."
The August gold contract closed down US$1.50 at US$1,278.60 an ounce and the July natural gas contract ended down five cents at US$2.90 per mmBTU.