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Canadian Shares Down Sharply On U.S.-China Trade War Worries

Worries about trade war sent stock prices crashing down sharply on Bay Street Friday morning. Selling is so widespread that except the index tracking the performance of real estate stocks, the rest are all down in negative territory.

The benchmark S&P/TSX Composite Index is down 156.70 points, or 0.96%, at 16,165.05, after having declined to a low of 16,138.98 earlier.

The Capped Consumer Discretionary Index is down 1.87%. Dollarama Inc. (DOL.TO), Canadian Tire Corporation (CTC.A.TO) and Canada Goose Holdings (GOOS.TO) are down 2 to 2.5%. Magna International (MG.TO) is declining 3.7% and The Stars Group Inc. (TSGI.TO) is down more than 6%.

The Capped Healthcare Index is lower by 2.2%. Canopy Growth Corporation (WEED.TO), Aurora Cannabis Inc. (ACB.TO) and Hexo Corp. (HEXO.TO) are down 2 to 2.5%, while Green Organic Dutchman Holdings (TGOD.TO) and Bausch Health Companies (BHC.TO) are both lower by about 4.5%.

Meanwhile, Cronos Group Inc. (CRON.TO) is rising 2.2% and Aphria Inc. (APHA.TO) is gaining 1.5%.

Among the stocks in the financial index, Royal Bank of Canada (RY.TO), Toronto-Dominion Bank (TD.TO), Bank of Montreal (BMO.TO) and National Bank of Canada (NA.TO) are down 1 to 1.2%. Bank of Nova Scotia (BNS.TO) and Canadian Imperial Bank of Commerce (CM.TO) are both lower by about 0.85%.

Sun Life Financial (SLF.TO) is declining 0.8%, while Manulife Financial Corporation (MFC.TO) and Fairfax Financial Holdings (FFH.TO) are down 1.8% and 1.4%, respectively.

In the energy space, Suncor Energy (SU.TO), Encana Corporation (ECA.TO), Imperial Oil (IMO.TO), Tourmaline Oil Corp. (TOU.TO), Vermilion Energy (VET.TO), Husky Energy (HSE.TO) and PrairieSky Royalty (PSK.TO) are declining 1 to 2%.

Enbridge Inc. (ENB.TO) reported a $265 million increase in adjusted earnings in the first quarter of 2019. The company attributed the increase to strong operating results and operating cost efficiencies across many of its business units. On a per share basis, adjusted earnings decreased by $0.01 per share compared to the same period in 2018. The stock is down by about 0.6%.

Materials stock Nutrien Inc. (NTR.TO) is up more than 1.5%. The company reported net income from continuing operations of $41 million for the first quarter ended March 31, compared with net loss of $1 million a year ago. However, that was short of expectations as agriculture supply chain of the company got disrupted due to flooding across the U.S. and severe drought in Australia.

In the technology space, Shopify Inc. (SHOP.TO), Constellation Software (CSU.TO), Open Text Corporation (OTEX.TO), BlackBerry (BB.TO), Celestica Inc. (CLS.TO) and Descartes Systems Group (DSG.TO) are down 1 to 3%.

Kinaxis Inc. (KXS.TO) is rising nearly 4.5% after reporting a 53% jump in profit in the first quarter of 2019, over the year-ago quarter.

Sierra Wireless (SW.TO) is climbing up nearly 8%. Sierra reported net loss was $11.2 million, or $0.31 per diluted share, in the first quarter of 2019 compared to net loss of $8.4 million, or $0.23 per diluted share, in the first quarter of 2018.

In economic news, employment in Canada increased by 106,500 in April 2019, beating forecasts by a substantial margin.

Meanwhile, the unemployment rate in Canada fell to 5.7% in April 2019 from 5.8% in the previous month and slightly below market expectations of 5.8%.

The value of building permits in Canada increased 2.1% from the previous month to CAD 8.1 billion in March of 2019, after a downwardly revised 5.1% fall in February and below market expectations of a 2.8% increase.

U.S. stocks are down sharply with traders pressing sales amid worries about the economic impact of an escalating trade dispute between the U.S. and China.

The U.S. hiked the tariff on $250 billion worth of Chinese goods from 10 percent to 25 percent after the U.S. and China failed to reach a trade deal by a midnight deadline.

Additionally, Trump noted in a post on Twitter that the process has begun to place tariffs on the remaining $325 billion worth of Chinese imports.

Trump praised the massive tariff payments to the U.S. Treasury and said there is "absolutely no need to rush" to reach a trade agreement with China.

Crude oil and gold prices are up in positive territory, but the mood in the market is quite bearish for now due to fears of a prolonged trade war between the world's two largest economies.

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