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(Bloomberg) — Canada’s equities benchmark quickly dropped on Friday after US President Donald Trump said in a social media post that he was ending all trade discussions with the country, claiming that it is implementing a digital services tax.
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The S&P/TSX Composite Index, which hit a record high as recently as Tuesday, ended Friday down 0.2% with the materials and consumer sectors dragging on the index. Gold stocks were particularly hard hit as bullion prices declined.
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“Everybody thought we were back to sunshine and rainbows,” said Colin Cieszynski, portfolio manager and chief market strategist at SIA Wealth Management in Toronto, adding that the market reaction shows Trump’s comments were a “total surprise” to traders.
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Cieszynski also said that “volatility is back” and investors should treat the comments as a precursor to more trade uncertainty in the coming months. “It’s possible this might a warning shot on trade,” he added.
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In the US, the S&P 500 and Nasdaq 100 indexes both pared gains after Trump’s comments but ended the day higher. The Cboe VIX Index hovered around 16.
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Unless this latest trade dispute is resolved over the weekend, it is “probably going to trigger more profit taking,” said Brian Madden, chief investment officer at First Avenue Investment Counsel Inc.
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Madden said he was was “pleasantly, but perhaps prematurely, surprised” when the US government backed down from a plan to raise taxes on foreign investors on Thursday night, which boosted optimism on Friday before Trump’s social media post about cutting off trade talks.
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(Adds First Avenue comments, updates indexes with closing moves)
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English (US)