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Canadian Shares Exhibiting Weakness On Weak Data, U.S.-China Tensions

The Canadian stock market was languishing in negative territory after a weak start Friday morning, as worries about U.S.-China tensions over Hong Kong rendered the mood a bit bearish.

Weak Canadian GDP and industrial product prices data also weighed on sentiment.

The benchmark S&P/TSX Composite Index was down 103.40 points, or 0.68%, at 15,159.33 about a quarter past noon.

Cannabis shares tumbled, dragging the Healthcare Index down by nearly 9%. Energy and financial stocks were the other major losers. The Capped Energy Index was down 1.8% at noon, while the Financial Index declined 1.7%. Real estate stocks were also mostly lower.

Materials shares moved higher. Information technology stocks found modest support, while consumer staples and consumer discretionary stocks were turning in a mixed performance.

Canopy Growth Corp (WEED.TO) plummeted 22.5%. Canopy reported a loss of $1.3 billion for the fourth quarter ended March 31, 2020.

The company said it will no longer strive to be the first to every market, but rather focus on select markets where it can become a leader in consumer insights and product development. The company reported a loss of $3.72 per share for the quarter, compared with a loss of $379.5 million or $1.10 per share in the same quarter a year earlier.

Aurora Cannabis (ACB.TO) plunged nearly 9%. Cronos Group (CRON.TO), Sienna Senior Living (SIA.TO) and Hexo Corp (HEXO.TO) lost 6.5 to 8.5%. Aphria (APHA.TO), Chartwell Retirement Residences (CSH.UN.TO) and Extendicare (EXE.TO) were down 3 to 4.2%.

Husky Energy (HSE.TO), Vermilion Energy (VET.TO), Seven Generations Energy (VII.TO), Enerplus Corp (ERF.TO), Crescent Point Energy (CPG.TO), PrairieSky Royalty (PSK.TO) and Imperial Oil (IMO.TO) lost 2.5 to 4%.

In the financial space, Laurentian Bank (LB.TO) tumbled nearly 10%.

Bank of Nova Scotia (BNS.TO) shed 3.2%. National Bank of Canada (NA.TO), Manulife Financial (MFC.TO), CDN Western Bank (CWB.TO), Bank of Montreal (BMO.TO), Royal Bank of Canada (RY.TO), Canadian Imperial Bank of Commerce (CM.TO) and Toronto-Dominion Bank (TD.TO) were down 1.4 to 2.3%.

Pan American Silver Corp (PAAS.TO), up 10%, topped the list of gainers in the materials space. Hudbay Minerals (HBM.TO) is up 8.5%, while B2Gold Corp (BTO.TO), Yamana Gold (YRI.TO) and Kirkland Lake Gold (KL.TO) were up 4 to 6.5%.

Information technology stocks Kinaxis (KXS.TO) and Descartes Systems Group (DSG.TO) gained 3.7% and 3.4%, respectively. Enghouse Systems (ENGH.TO) moved up 3% and Shopify Inc. (SHOP.TO) gained about 1.3%.

The Canadian economy shrank 2.1% on quarter in the first quarter of this year, after expanding 0.1% in the previous period. It was the sharpest contraction since the first quarter of 2009.

On annualized basis, GDP growth decreased to -8.2% in the first quarter of 2020 from 0.6% in the fourth quarter of 2019.

The industrial product price Index in Canada declined 2.3% month-over-month in April, after falling 0.9% in the previous month. It was the fourth consecutive monthly decrease and the largest decline since December 2008.

Meanwhile, tensions between U.S. and China have risen following Beijing approving a controversial security law on Hong Kong that could dramatically erode the special administrative region's autonomy.

U.S. President, Donald Trump, who has repeatedly blamed China for the coronavirus pandemic, leading to rising tensions between the two economic superpowers, is extremely critical of China's move on Hong Kong.

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