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TSX Falls After Upbeat Start, But Recovers To End On Positive Note

After a buoyant start, the Canadian stock market faltered and fell into the red around noon on Monday, but recovered and edged higher to eventually close with modest gains.

The market opened on an upbeat note as investors reacted positively to the news that U.S. President Trump and Chinese President Xi agreed to a 90-day truce in the escalating trade war between the two countries over the weekend.

Healthcare and industrials stocks retreated, but strong gains in energy and materials sections lifted the market to a positive close. A few stocks from information technology sector moved up as well.

The benchmark S&P/TSX Composite Index ended up 77.16 points, or 0.51%, at 15,274.98, after scaling a high of 15,378.90 and a low of 15,154.73 intraday.

On the economic front, the headline seasonally-adjusted IHS Markit Canada Manufacturing Purchasing Managers' Index came with a reading of 54.9 in November, up from 53.9 in October, signalling the sharpest improvement in business conditions since August.

Energy stocks rallied after crude oil prices climbed higher as worries about demand growth subsided a bit thanks to the temporary truce in U.S.-China trade war. Slightly easing concerns about excess supply helped as well. The Capped Energy Index climbed up nearly 4%.

Canadian Natural Resources (CNQ.TO) jumped 9.6%, Encana Corporation (ECA.TO) climbed up 5.2% and Cenovus Energy (CVE.TO) zoomed nearly 12%, while Husky Energy (HSE.TO), Vermilion Energy (VET.TO), Tourmaline Oil Corp. (TOU.TO) gained 1% to 3%.

Whitecap Resources (WCP.TO) added 5.4%, Crescent Point Energy (CPG.TO) vaulted more than 10%, Baytex Energy Corp. (BTE.TO) ended 10.2% up and Athabasca Oil Corporation (ATH.TO) gained 12.7%.

Materials stocks surged higher, tracking gold prices. The Capped Materials Index ended 2.15% up. First Quantum Minerals (FM.TO) rallied 11.4% and Teck Resources (TECK.B.TO) climbed up 4.8%. Kinross Gold Corporation (K.TO) ended nearly 4.5% up and Yamana Gold (YRI.TO) gained almost 3%.

Barrick Gold Corporation (ABX.TO), Agnico Eagle Mines (AEM.TO), Goldcorp Inc. (G.TO), Wheaton Precious Metals Corp. (WPM.TO) and Methanex Corporation (MX.TO) moved up by 1 to 3%.

Among information technology stocks, Constellation Software Inc. (CSU.TO) and Shopify Inc. (SHOP.TO) both gained about 2.5%.

In the banking space, Toronto-Dominion Bank (TD.TO) declined by about 0.7%, Canadian Imperial Bank of Commerce (CM.TO) shed 0.6% and National Bank of Canada (NA.TO) declined 0.35%.

Bank of Nova Scotia (BNS.TO) ended modestly higher, while Bank of Montreal (BMO.TO) and Royal Bank of Canada (RY.TO) ended flat.

Among the stocks in the healthcare index, Canopy Growth Corporation (WEED.TO) ended 2.3% down. The company announced today that it has entered into two agreements with 48North Cannabis Corp. (TSXV: NRTH) a strategic investment financing and partnership and a supply agreement. Under the Supply Agreement, 48North will supply Canopy Growth with dried cannabis grown at 48North's wholly-owned facility, DelShen Therapeutics Corp.

Aphria Inc. (APHA.TO) plunged as much as 27.7% to hit its lowest level in more than a year after a short seller published a report alleging the company has wasted hundreds of millions on foreign acquisitions that are essentially worthless.

Extendicare (EXE.TO) ended 1.9% down and Aurora Cannabis (ACB.TO) declined by 1%, while Bausch Health Companies (BHC.TO) ended nearly 3.5% up.

Canadian Pacific (CP.TO) ended 1.7% down after the company announced that it has reached a tentative, four-year agreement with Unifor.

Equitable Group Inc. (EQB.TO) announced it has reached an agreement to acquire Bennington Financial Services Corp, a profitable and growing privately owned company serving the brokered equipment leasing market in Canada. The stock gained nearly 1%.

Markets in Asia and Europe ended on a high note on Monday as trade tension eased and worries about global economic growth subsided a bit after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce on their escalating trade war.

In economic releases from Eurozone, a report from IHS markit showed eurozone's manufacturing growth slowed less-than-expected in November, amid marginal growth in output and weak business confidence. The manufacturing purchasing managers' index fell to 51.8, the lowest since August 2016, from 52 in October. The flash reading was 51.5.

UK manufacturing growth improved in November, but activity remained subdued amid a second consecutive month of decline in export orders, though domestic demand increased as Brexit worries prompted clients to stock up on supplies.

The CIPS manufacturing purchasing managers index rose to 53.1 from October's 27-month low of 51.1, survey data from IHS Markit showed on Monday. Economists had forecast a score of 51.7.

U.S. stocks recovered after a fall from earlier highs, but stayed positive right through the session, with the positive outcome of the meeting between U.S. President Donald Trump and Chinese President Xi Jinping over the weekend.

The two presidents agreed to a 90-day truce in the escalating trade war between the two countries as they work to reach a long-term trade deal. While Trump agreed not to raise the tariffs on $200 billion worth of Chinese goods to 25% from 10% on January 1st as planned, China agreed to purchase a "not yet agreed upon, but very substantial, amount" of agricultural, energy, industrial, and other product from the U.S.

Trump also said China will be "opening up" and "getting rid of tariffs," stating in a subsequent post on Twitter that China has agreed to reduce and remove tariffs on cars coming into the country from the U.S.

On the U.S. economic front, the Institute for Supply Management said its purchasing managers index climbed to 59.3 in November after falling to 57.7 in October, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to edge down to 57.5.

Meanwhile, a separate report from the Commerce Department showed construction spending unexpectedly edged lower in October.

In commodities, Crude oil futures for January ended up $2.02, or about 4%, at $52.95 a barrel.

Gold futures for February ended up $13.60, or 1.1%, at $1,239.60 an ounce, the highest settlement in more than a month for a most active contract.

Silver futures for March settled at $14.499 an ounce, gaining about 2%, while Copper futures for March ended up by about 0.6%, at $2.8095 per pound.

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