Canada’s main stock index slipped on Friday, as trade worries over U.S. President Donald Trump’s accusation in a social media post of China violating a tariff agreement offset positive sentiments about domestic economic growth.
“China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!,” Trump said on his Truth Social platform.
The Toronto Stock Exchange’s S&P/TSX composite index was down 0.3% at 26,133.45 points. However, for the week, the index was up 1.2%.
Global equities had initially rallied in the previous session, after the Court of International Trade ruled late on Wednesday to effectively block most levies imposed since January.
However, a U.S. federal appeals court temporarily reinstated Trump’s tariffs on Thursday, to consider the government’s appeal.
“People who were expecting to see some clarity in the market are going to be somewhat disappointed”, said Michael Sprung, president at Sprung Investment Management.
“When Trump says China has violated any sort of agreement the whole premise might be that he might do something retaliatory, which is going to be inflationary and harmful.”
Data showed, Canada’s economy grew faster than expected in the first quarter. But an increase in imports that led to inventory build-up, lower household spending and weaker final domestic demand showed that the economy was battling on the domestic front. Economists have warned that as tariffs continue on Canada, this trend will persist.
This comes ahead of the Bank of Canada’s rates decision next week. The market sees a 22% chance of a rate cut next week, down from 27% before GDP data.
The TSX has gained 5.4% so far in May and was set for its best month in six, boosted by investor optimism on easing of the global trade war earlier this month.
South of the border, U.S. consumer spending increased marginally in April as a rush to beat higher prices from import duties slowed.
On TSX, energy subindex fell 1.3% as oil prices headed for a second consecutive weekly loss.
Healthcare stocks fell 1.7%.
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