Resource stocks weigh on Toronto market, loonie down despite rate hike

Ian Bickis, The Canadian Press
Published Wednesday, July 11, 2018 4:27PM EDT
Last Updated Wednesday, July 11, 2018 5:48PM EDT

A rise in trade tensions after the U.S. released details of more planned tariffs against China helped send commodities and North American markets down Wednesday, while the loonie also slipped despite a rate hike by the Bank of Canada.

Markets reacted this morning after the U.S. released a list of $200 billion in Chinese goods that could be hit by tariffs, which China promised to retaliate against.

“This is certainly a heightened risk,” said Kathryn Del Greco, vice president and investment advisor at TD Wealth.

“We have not, certainly in recent memory, been through a scenario where we have global trading partner tension increasing at the pace that we see.”

The trade tensions have investors and policy-makers concerned about how rising protectionism could impact global growth, which helped push down prices for commodities including crude and copper.

The concerns weren’t enough to stop Bank of Canada governor Stephen Poloz from raising the interest rate a quarter-point to 1.5 per cent Wednesday, though he warned the economy should brace for larger impacts from mounting trade uncertainty.

The rise in the interest rate helped push the loonie up earlier in the day, but it averaged 76.04 cents US for a 0.15 of a US cent drop on the day on trade tensions, said Del Greco.

“At the initial announcement the loonie rallied quite sharply, but throughout the day it lost that momentum and is now down on the day as pressures from the weakening stock market, commodity prices and trade tensions increasing have put further pressure on it.”

Still, Del Greco said Poloz struck a hawkish tone at times and there could be another rate hike coming later in the year.

“Depending on how

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