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Canadian Shares Drifting Lower As Trade Talks Optimism Fade

The Canadian stock market opened weak Tuesday morning and slipped deeper into the session as the session progressed, as uncertainty about a positive outcome from the upcoming trade talks between the U.S. and China, and falling crude oil prices pushed down values of shares.

Energy stocks were the most prominent losers. Consumer discretionary, industrial, information technology and financial shares too were mostly lower. Healthcare and real estate shares turned in a mixed performance, while materials shares edged higher on firm gold prices.

The benchmark S&P/TSX Composite Index, which declined to 16,274.70, was down 119 points, or 0.72%, at 16,302.75 a litte past noon.

The Capped Energy Index shed as much as 2.8%. Encana Corp (ECA.TO), Whitecap Resources (WCP.TO), Tourmaline Oil Corp (TOU.TO), MEG Energy (MEG.TO), Cenovus Energy (CVE.TO), Husky Energy (HSE.TO), Canadian Natural Resources (CNQ.TO), Suncor Energy (SU.TO), Enerplus Corp (ERF.TO), Baytex Energy (BTE.TO), Crescent Point Energy (CPG.TO), Vermilion Energy (VET.TO) and Imperial Oil (IMO.TO) lost 2 to 5%.

Among consumer discretionary shares, The Stars Group Inc. (TSGI.TO), Canada Goose Holdings (GOOS.TO), Hudsons Bay (HBC.TO), Brp Inc. (DOO.TO) and Great Canadian Gaming Corp (GC.TO) declined 2 to 4%.

In the financia space, Manulife Financial (MFC.TO), Sun Life Financial (SLF.TO), Onex Corp (ONEX.TO), Fairfax Financial Holdings (FFH.TO), Bank of Montreal (BMO.TO) and Royal Bank of Canada (RY.TO) lost 1 to 1.6%.

In the industrials space, WSP Global (WSP.TO) declined more than 6%. Mullen Group (MTL.TO), Ag Growth International (AFN.TO) and Tfi International (TFII.To) were down 2.8 to 3%.

Information technology shares Celestica Inc. (CLS.TO), Blackberry (BB.TO) and Shopify Inc. (SHOP.TO) declined 2.8 to 3.2%.

In the materials space, Novagold (NG.TO) moved up 3.7%. Yamana Gold (YRI.TO), Centerra Gold (CG.TO), Barrick Gold Corp (ABX.TO), B2Gold Corp (BTO.TO), Kinross Gold (K.TO), Kirkland Lake Gold (KL.TO), Detour Gold (DGC.TO) and Iamgold Corp (IMG.TO) gained 1 to 2.3%.

Among the stocks in the Healthcare index, Extendicare (EXE.TO) gained 1.8%. Bausch Health Companies (BHC.TO), Aurora Cannabis (ACB.TO) and Canopy Growth Corp (WEED.TO) were up with modest gains, while Hexo Corp (HEXO.TO), Cronos Group Inc. (CRON.TO) and Aphria Inc. (APHA.TO) lost 3.1%, 2% and 1.7%, respectively.

In economic news, a report from Canada Mortgage and Housing Corporation said the seasonally adjusted annual rates of housing starts in Canada fell 2.5% from a month earlier to 221,202 units in September 2019, still beating market expectations of 214,500.

Meanwhile, the value of building permits in Canada increased 6.1% from a year earlier to C$ 9.0 billion in August 2019, following an upwardly revised 3.2% gain in the previous month and above market forecasts of a 1% fall.

The mood was bearish in the market after a report from the South China Morning Post said China is subtly toning down expectations ahead of this week's high-level negotiations.

The report said Chinese Vice Premier Liu He is leading China's delegation to Washington but will not carry the title of "special envoy" for President Xi Jinping, an early indication that Liu has not been given any particular instructions from China's leader.

News that the U.S. has expanded its trade blacklist to include some of China's top artificial intelligence firms may also cast a shadow over the talks. A report in Bloomberg that the White House is discussing blocking government pension funds from investing in China may also hinder trade talks.

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