Materials, energy help TSX outpace U.S. markets weighed by China concerns

TORONTO — The materials and energy sectors helped Canada's main stock index to outpace U.S. markets Tuesday which were essentially flat after U.S. President shifted his focus on trade from Mexico to China.

The markets started the day stronger but retrenched around midday on some macroeconomic realities, specifically on trade, says Craig Jerusalim, portfolio manager at CIBC Asset Management.

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In a volley of tweets, Trump defended using tariffs as a "great negotiating tool," putting China back in his crosshairs as the G20 summit approaches where he is expected to meet Chinese president Xi Jinping.

"I guess there's some skepticism that anything is going to come out of that at this point," he said in an interview, adding that he expects negotiations with China will be a drawn-out process.

The S&P/TSX composite index closed up 32.50 points at 16,248.76.

In New York, the Dow Jones industrial average snapped a six-day streak by losing 14.17 points at 26,048.51. The S&P 500 index was down 1.01 points at 2,885.72, while the Nasdaq composite was down 0.60 points at 7,822.57.

Six of the 11 major sectors of the TSX were up led by materials, energy and industrials.

Materials was up 1.42 per cent as shares of Teck Resources Ltd. climbed 4.75 per cent, followed by Barrick Gold Corp.

The August gold contract was up US$1.90 at US$1,331.20 an ounce and the July copper contract was up one cent at US$2.67 a pound.

In addition, iron ore prices reached a new record high of more than US$100 per tonne on major supply disruptions in Brazil and strong demand from Asian countries, said Jerusalim.

The energy sector was up 0.77 per cent with Cenovus Energy Inc. rising 1.73 per cent, followed by Canadian Natural Resources.

The July crude contract was up one cent at US$53.22 per barrel and the July natural gas contract was up 4.2 cents at US$2.40 per mmBTU.

"Crude seems to have found some stability or support in the low $50s and really everyone is now waiting for news out of the next OPEC plus Russia meetings to determine whether or not they're going to continue to control the supply coming out of the group," Jerusalim added.

The Canadian dollar traded at an average of 75.31 cents US compared with an average of 75.37 cents US on Monday.

Industrials was the third-best sector on the day as SNC-Lavalin shares gained seven per cent to $25.35 after CEO Neil Bruce stepped down after a nearly four-year tenure. Interim CEO Ian Edwards was tasked with reviewing "the strategic direction of the company on an expedited basis" and develop a new plan "for sustainable success."

"The current situation is not sustainable for the company to continue to be a going concern. Either they need clarity from the Canadian government [on bypassing criminal charges] or they're likely going to be sold."

Companies in this story: (TSX:TECK.B; TSX:ABX, TSX:CVE, TSX:CNQ, TSX:SNC, TSX:GSPTSE, TSX:CADUSD=X)

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