North American stock markets start the week lower ahead of U.S.-China trade talks

TORONTO — North American stock markets started the week lower ahead of the resumption of trade talks between the world's two largest economies.

The U.S. and China are set to resume negotiations Thursday in Washington, D.C., but chatter on the weekend said that China wants to pull back and try to negotiate a more limited deal than the U.S. seeks, says Colin Cieszynski, chief market strategist at SIA Wealth Management.

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"I think China's starting to see that with the U.S. economy slowing and all the political turmoil that they're probably thinking the U.S. might be not quite in as strong a bargaining position as they were a weeks or few months ago," he said in an interview.

Cieszynski said he expects small, short-term swings throughout the week amid a ramping up of tweets, posturing, rumours and rhetoric.

"It looks like we're probably in for another bumpy week, especially in the absence of really not much else to talk about," he said, pointing to limited economy data and corporate reporting largely starting next week.

He said what's important is once talks start, that they get somewhere.

"My personal expectations are that hopefully they will just make progress and agree to just keep talking. I'm not personally expecting them to reach a deal. I don't think either side is quite there yet and I don't think there's enough pressure on them either at this point in time to actually conclude something."

The S&P/TSX composite index closed down 27.53 points at 16,421.82.

Nine of the 11 major sectors of the index ended the day lower, led by health care as shares of Hexo Corp. fell 6.8 per cent in the first trading following the announced departure of the cannabis producer's chief financial officer.

Materials was also lower on a drop in gold prices, hurting Yamana Gold Inc.

The December gold contract was down US$8.50 at US$1,504.40 an ounce and the December copper contract was up 1.45 cents at US$2.58 a pound.

Energy was a little lower as crude oil prices fell on demand concerns despite unrest in Iraq.

"The weak outlook for demand ends up overcoming any short-term fears over supply."

The November crude contract was down six cents at US$52.75 per barrel and the November natural gas contract was down 4.9 cents at US$2.30 per mmBTU.

Real estate and utilities were the strongest sectors, rising slightly as investors sought defensive stocks and anticipate that the Bank of Canada will cut interest rates later this month, after the Oct. 21 federal election.

Markets activity was fairly muted on Monday because "there's nothing really for traders to really jump on and go with," Cieszynski said.

In New York, the Dow Jones industrial average was down 95.70 points at 26,478.02. The S&P 500 index was down 13.22 points at 2,938.79, while the Nasdaq composite was down 26.18 points at 7,956.29.

The Canadian dollar traded for an average of 75.15 cents US compared with an average of 75.09 cents US on Friday.

This report by The Canadian Press was first published Oct. 7, 2019.

Companies in this story: (TSX:YRI, TSX:HEXO, TSX:GSPTSE, TSX:CADUSD=X)

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