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Canada’s main stock index opened lower on Monday on fears of an escalating trade war between the United States and China.

The Toronto Stock Exchange’s S&P/TSX Composite Index was down 51.38 points, or 0.31 per cent, at 16,263.04

The Canadian dollar steadied against its U.S. counterpart on Monday ahead of a speech by a Bank of Canada deputy governor, as oil prices rose and investors weighed the threat of a trade war that could slow global growth.

The Canadian dollar was trading nearly unchanged at $1.3194 to the greenback, or 75.79 U.S. cents. The currency, which fell 2 per cent last week, traded in a narrow range between $1.3160 and $1.3208.

On Friday, it touched its weakest level in nearly a year at $1.3210.

U.S. stocks fell at the open on Monday as a trade dispute between the United States and China intensified following Beijing’s retaliation to tariffs imposed by President Donald Trump.

The Dow Jones Industrial Average fell 208.44 points, or 0.83 pe rcent, at the open to 24,882.04. The S&P 500 opened lower by 18.55 points, or 0.68 per cent, at 2,761.11. The Nasdaq Composite dropped 53.82 points, or 0.69 per cent, to 7,692.55 at the opening bell.

In response to Trump’s $50-billion in tariffs on Chinese goods, Beijing retaliated immediately by slapping duties on American export products, including crude oil, and suspended all previous trade agreements with Trump’s administration.

Global financial markets have struggled since February in the face of signs that Washington and Beijing were headed toward a trade war after several rounds of negotiations failed to resolve U.S. complaints over Chinese industrial policy, market access and a $375 billion trade gap.

Shares of manufacturers Boeing and Caterpillar were down around 1.3 per cent and 1.2 per cent respectively in early trading.

Oil prices, which were lower in early global trading, steadied ahead of an OPEC meeting where top suppliers Saudi Arabia and Russia are expected to agree to increase global crude supply.

“When you have a combination of concerns over trade, in particularly over China, and the possibility of more oil production coming on line, it’s not surprising to see the kind of reaction we’re seeing right now,” said Art Hogan, chief market strategist, B. Riley FBR in New York.

“The trade war is definitely on the front burner right now, and will continue to be in the absence of news catalysts and unless something substantially changes,” he added.

Investors are also assessing the impact of tightening monetary policy by central banks after the U.S. Federal Reserve raised interest rate last week and the European Central Bank said it planned to end its bond-purchase program at year-end.

The price of oil, one of Canada’s major exports, rose ahead of an OPEC meeting this week that is widely expected to increase global crude supply and as investors assessed the impact of a trade dispute between the United States and China.

Oil prices rose on Monday ahead of an OPEC meeting this week that is widely expected to increase global crude supply and as investors assessed the impact of a trade dispute between the United States and China.

U.S. light crude oil hit a two-month low of $63.59 a barrel but they recovered to trade at $65.00, down 6 cents.

Benchmark Brent, meanwhile, rose more than $1 to a high of $74.45 a barrel and was trading at $74.40, up 96 cents, by 1210 GMT.

Brent hit a 3-1/2-year high above $80 a barrel in May but has since fallen on reports that top suppliers Saudi Arabia and Russia will increase production.

“Oil prices are reversing this morning’s bout of weakness as bottom pickers enter the fray ahead of this week’s crucial OPEC/non-OPEC meeting,” said Stephen Brennock, analyst at London brokerage PVM Oil Associates.

The Organization of the Petroleum Exporting Countries, de facto led by Saudi Arabia, and some allies including Russia have been withholding output since the start of 2017.

They will meet in Vienna on June 22 to decide forward production policy, with Russia and Saudi Arabia pushing for higher output.

All oil market eyes are now focused on OPEC, Commerzbank commodities analyst Carsten Fritsch said:

“That production will be increased in the second half of the year is considered certain – the only question is by how much.”

Reuters

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 7:00pm EDT.

SymbolName% changeLast
CAT-N
Caterpillar Inc
+0.49%366.43
BA-N
Boeing Company
+0.54%192.99

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