Canadian Manufacturing

Stock markets close down after Trump comments about U.S. China trade war

President Trump's talk of tariffs on French goods and comments on "no deadline" for a trade deal created uncertainty and led markets to a risk-off day

December 4, 2019  The Canadian Press

TORONTO – North American stock markets closed down Tuesday after comments by U.S. President Donald Trump cast doubt on a quick resolution to the U.S.-China trade war.

Trump said he has “no deadline” for a deal and didn’t mind waiting until after the 2020 election to make one. Investors had been hoping for a deal this year, or at least enough progress to stave off new U.S. tariffs on Chinese goods, including smartphones and laptops, scheduled to start Dec. 15.

The comments on trade, as well as proposed U.S. tariffs on US$2.4 billion in French goods, created uncertainty and led markets to a risk-off day, said Dominique Barker, portfolio manager at CIBC Asset Management.

“We’re seeing some of the more defensive sectors rallying such as REITs and utilities,” she said.


The latest tariff news also comes a day after Trump announced it would reimpose tariffs on steel and aluminum from Brazil and Argentina, and news of further setbacks on the China trade negotiation front.

The uncertainty helped push the S&P/TSX composite index down 89.29 points to 16,892.18 on a mixed performance.

The financial index dropped 1.03% after BMO’s profit fell on a restructuring charge related primarily to severance payments for about five per cent of its global workforce. The bank’s shares closed down 2.12%, while other major banks also saw shares dip.

The industrial and consumer discretionary indexes also lost ground amid heightened uncertainty.

The energy index dropped 1.75%, even as the January crude contract closed up 14 cents at US$56.10 per barrel. The drop in the sector is more due to a general negative perception for fossil fuels than the risk-off day, said Barker.

“Energy continues to be a bit of a punching bag unfortunately, they’re just trading at unbelievably low multiples.”

Utilities rose, as did materials as the February gold contract ended up US$15.20 at US$1,484.40 an ounce and gold equities rose.

In New York, the Dow Jones industrial average closed down 280.23 points at 27,502.81. The S&P 500 index was down 20.67 points at 3,093.20, while the Nasdaq composite was down 47.34 points at 8,520.64.

The Canadian dollar traded for 75.18 cents US, down from an average of 75.20 cents US on Monday.

The January natural gas contract was up 11 cents at US$2.44 per mmBTU and the March copper contract was down