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Update: TSX Little Changed, as Rising Cannabis Stocks Slightly Outweighed by Energy & Financial Shares

Canada's main stock market was little changed Monday, highlighted by rising cannabis stocks, with legalization just two days away. The S&P/TSX Composite Index was down 4 points to close at 15,409. The TSX added 97 points on Friday, ending a five-day losing run. U.S. stocks were also weaker with the Nasdaq losing nearly 1% and the Dow Jones dropping 89 points.

Healthcare led advancers, rising more than 6%. A rally in gold supported too, as materials gained 0.3%. Oil prices were higher today, but the TSX's energy sector lost 0.8% while financials were down 0.6%.

In stock news, Canopy Growth (WEED.TO) jumped 13% after reaching a deal to acquire U.S. hemp researcher Ebbu in a stock and cash deal valued at $425 million. Canopy Growth shares have gained 131% in 2018. Heavily traded Aurora Cannabis (ACB.TO) was up 10% today while Aphria (APH.TO) climbed 4%.

In economics news, businesses remained upbeat in the Bank of Canada's Q3 (Autumn) Business Outlook Survey -- and that despite interviews being conducted before the U.S., Canada, and Mexico agreed on a NAFTA replacement earlier this month. Indeed, the survey broadly supported the view that increasing domestic capacity constraints and tight labour markets had become a more significant impediment to growth than trade uncertainty, even before the NAFTA renegotiation resolution. U.S. trade policy was cited as a concern for some businesses but overall machinery and equipment investment intentions nonetheless jumped higher, driven by strong demand (including export demand) and the need to expand existing capacity. More than half (56%) of firms reported they would have trouble boosting production to meet unexpected demand. Labour shortages became more widespread and more intense in the Q3 survey. Of course, not all trade concerns have gone away with remaining U.S./Canada steel and aluminum tariffs in particular reportedly having some upward impact on input prices. Some, although not all, of those costs are still expected to be passed on to output prices. Most businesses (62%) continued to anticipate consumer price inflation to be at or above the 2% midpoint of the Bank of Canada's 1% to 3% inflation target range. This report further cements the odds that the Bank of Canada will remain on a gradual rate hiking path with the next 25 basis point hike to the overnight target rate likely coming at next week's policy meeting.

The Canadian dollar gained nearly a quarter of a cent on the Bank of Canada's upbeat business survey to 77 cents US.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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