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TSX Ends Sharply Lower On Profit Taking, Trade Concerns

Canadian shares plunged sharply on Tuesday, tracking losses on Wall Street where stocks fell on profit taking and amid fading hopes about a resolution to the U.S.-China trade dispute before the expiry of the 90-day truce period faded.

Investor sentiment took a beating on U.S. President Donald Trump's threat that more taxes would be imposed on China if trade talks fell through. Markets also reacted to news that U.S. Trade Representative Robert Lighthizer, one of Trump's more hawkish advisors on trade with China, has been tapped to lead the negotiations.

Energy, financial, healthcare, consumer discretionary, industrials and information technology stocks declined sharply.

The benchmark S&P/TSX Composite Index ended down 211.39 points, or 1.38%, at 15,063.59, slightly off the day's low of 15,047.06.

The Capped Financial Index declined by about 1.6%. Bank of Montreal (BMO.TO) ended nearly 4% down. The bank reported net income of $1,695 million for the fourth quarter, up 38% over year-ago quarter. Adjusted net income was up 17%, at $1,529 million. The group has increased its dividend by $0.04 from the prior quarter to $1.00, up 8% from the prior year.

Toronto-Dominion Bank (TD.TO) declined by 1.7%, Bank of Nova Scotia (BNS.TO) weakened by 1.2%, Canadian Imperial Bank of Commerce (CM.TO) ended 1.1% down, Royal Bank of Canada (RY.TO) ended 0.75% down and National Bank of Canada (NA.TO) weakened by about 0.55%.

The Capped Energy Index shed about 2.2%. Canadian Natural Resources (CNQ.TO), Cenovus Energy Inc. (CVE.TO), Vermilion Energy Inc. (VET.TO) and Tourmaline Oil Corp. (TOU.TO) lost 2% to 3%, while ARC Resources (ARX.TO) ended 3.6% down and Encana Corporation (ECA.TO) plunged more than 5%.

In the materials space, Teck Resources (TECK.B.TO) gained more than 2% after the company announced that it has sold a 30% stake in its Quebrada Blanca Phase 2 project to Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. for US$1.2 billion.

The Capped Healthcare Index lost more than 4.5%. Bausch Health Companies Inc. (BHC.TO) declined 2.8%. Aurora Cannabis Inc. (ACB.TO) and Canopy Growth Corporation (WEED.TO) both ended lower by 5.3%.

Aphria Inc. (APHA) plunged more than 21%, losing heavily for a second successive day. The company on Monday defended its Latin American operations from claims in a short-seller report that it had overpaid for assets.

The Capped Industrials Index shed 2.8%. Bombardier Inc. (BBD.B.TO) ended more than 6% down and Finning International Inc. (FTT.TO) lost 5.7%. Canadian National Railway (CNR.TO), Canadian Pacific Railway (CP.TO), Air Canada (AC.TO) and Ritchie Bros. Auctioneers (RBA.TO) ended lower by 2.7% to 4%.

SNC-Lavalin Group Inc. (SNC.TO) and Toromont Industries (TIH.TO) also declined sharply.

Among consumer discretionary stocks, Magna International Inc. (MG.TO) declined nearly 6%, The Stars Group Inc. (TSGI.TO) ended 3.4% down, Linamar Corporation (LNR.TO) shed 2.7% and BRP Inc. (DOO.TO) ended nearly 3.5% down.

Dollarama Inc. (DOL.TO) gained more than 4% and Gildan Activewear Inc. (GIL.TO) advanced by 1.2%.

On the economic front, a report from Statistics Canada this morning showed that Canadian labor productivity increased by 0.3% in the third quarter.

On Wall Street, stocks tumbled as the yield on two-year notes rose above the yield on five-year notes, which is seen as an indicator of an upcoming economic slowdown. Heavy selling on profit taking after Monday's sharp upmove and amid uncertainty about the U.S. and China reaching a long-term trade agreement before the expiry of the 90-day truce contributed to the fall of U.S. stocks.

The Dow ended 3.1% down, the S&P 500 declined by 3.2% and the Nasdaq closed lower by 3.8%.

Markets in Asia and Europe drifted lower as hopes about a quick resolution to the U.S.-China trade dispute faded.

In commodities, crude oil futures for January delivery ended up $0.30, or 0.6%, at $53.25 a barrel.

Gold futures for February ended up $7.00, or 0.6%, at $1,246.60 an ounce, the highest settlement since July 25.

Silver futures for March settled higher at $14.640 an ounce, while Copper futures for March ended weak at $2.759 per pound. On Monday, silver futures settled at $14.499 an ounce, while Copper futures closed at $2.8095 per pound.

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