stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
NAFTA uncertainty hits Canadian markets
space
Dollar, government bond yields and blue-chip shares slide on report U.S. is preparing to pull out of trade deal, then make partial rebound after White House denial
space
By DAVID BERMAN
  
  

Email this article Print this article
Thursday, January 11, 2018 – Page B1

The Canadian dollar, government bond yields and a number of bluechip stocks sank on Wednesday after reports that the United States is considering withdrawing from the North American free-trade agreement, raising questions about how Canadian exporters and the domestic economy will respond if the deal is terminated.

The loonie, which began the day comfortably above 80 cents against the U.S. dollar, fell as low as 79.5 cents shortly after noon, before regaining some lost ground. Mexico's peso also fell sharply.

"Trade uncertainty was just kicked up a notch," Priscilla Thiagamoorthy, economic analyst at BMO Nesbitt Burns Inc., said in a note.

She added: "Today's large movements highlight the sensitivity of currencies to any trade news and we could see more wild swings as the spat continues."

The reversal follows a report from Reuters that said unnamed Canadian government officials believe the United States could signal its intention to withdraw from the trade agreement.

The White House responded to the Reuters story on Wednesday, saying "there has been no change in the President's position on NAFTA." However, Mr. Trump has repeatedly said he is willing to terminate the agreement if a new deal cannot be struck.

Trade representatives embark upon the sixth round of negotiations later this month in Montreal.

Financial players, including Bank of Montreal strategists and Royal Bank of Canada's chief executive officer, have noted this week that NAFTA is looking increasingly fragile. However, Wednesday marked the first time that markets reflected the increasing possibility of a U.S.

withdrawal from the trade deal.

Government bond yields, which had been rallying in anticipation of interest rate hikes by the Bank of Canada this year, promptly reversed course.

The yield on the the two-year Government of Canada bond fell to 1.74 per cent, down six basis points.

Stocks were also caught up in the shifting outlook.

The benchmark S&P/TSX composite index, which was higher in morning trading, ended the day down 71.29 points or 0.4 per cent, closing at 16,247.95.

Some of Canada's largest exporters and companies key to the movement of Canadian exports to the United States fell the hardest.

Auto-parts giant Magna International Inc., which analysts believe could be particularly vulnerable to changes in the trade agreement given that its parts are used by U.S. auto manufacturers, fell 3.2 per cent.

Canadian National Railway Co. fell 2.7 per cent and Canadian Pacific Railway Ltd. fell 3.1 per cent. According to estimates from BMO Nesbitt Burns, both railways derive about 30 per cent of their revenue from trade between the United States and Canada.

Financial markets also readjusted their outlook for Canadian interest rates.

Markets now see a 75-per-cent chance that the Bank of Canada will raise its key interest rate next week, down considerably since Wednesday morning when markets reflected an 88-per-cent chance of a rate hike next week.

"The existing Bank of Canada forecast had assumed no change in trade relationships, so this is a negative for their outlook," Avery Shenfeld, chief economist at CIBC World Markets, said in a note.

While Mr. Shenfeld still expects the Bank of Canada to raise its key rate next week, he is sticking to his view that the central bank will then hold rates steady until the third quarter, amounting to just two quarter-point hikes this year.


Huh? How did I get here?
Return to Main Lysiane_Gagnon Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page