TSX, Canadian dollar slip as investors await Bank of Canada economic outlook

Stocks fell sharply on Wall Street on Monday as investors waited for more details on reports that the U.S. and China are moving closer to a deal to resolve their costly trade dispute. Toronto stocks fell on

New York stocks fall amid uncertainty over deal to end trade spat between U.S. and China

Since plunging late in 2018, the TSX has made gains. But the outlook for the economic is looking gloomier this year. (Frank Gunn/The Canadian Press)

Stocks fell on Wall Street on Monday as investors waited for more details on reports that the U.S. and China are moving closer to a deal to resolve their costly trade dispute.

The broad S&P index fell the most in a month, 14 points at the close to 2792, and the Dow was down by 206 points at 25,822. The S&P seems stalled just below the 2,800 level, which it last reached last October and November.

White House economic adviser Kevin Hassett said on Monday that U.S. Trade Representative Robert Lighthizer has made "progress" in talks with China, holding out hope that a deal could be reached this month.

The tit-for-tat tariffs between the two nations have hurt the global economic outlook, as well as pushing up prices in both economies.

In Toronto, the TSX fell 38 points to end the day at 16,044 amid gloom over the economic outlook for Canada.

The energy sector fell after Enbridge Energy said it was delaying its Line 3 pipeline startup by about a year.

Oil heavyweights Enbridge Inc., Cenovus Energy Inc. and Canadian Natural Resources fell by 4.5 to 5.8 per cent.

The energy decline was partially offset by gains by the materials and industrials sectors. Railroads Canadian National and Canadian Pacific saw stock increases on the prospect of more crude by rail.

Gold prices fell for a sixth straight day with the April gold contract down $11.70 at $1,287.50 US an ounce and the May copper contract was down 2.3 cents at $2.91 a pound.

Despite the price drops, stocks of gold miners Goldcorp Inc. and Barrick Gold Corp. gained more than three per cent after Newmont Mining Corp. rejected a hostile takeover offer from Barrick Gold and countered with a proposal of its own.

The loonie took a further hammering, after falling Friday with news that Canada's economy shrank by 0.1 per cent in December and grew just 0.4 per cent for the fourth quarter of the year.

The Canadian dollar ended trading at about 75.15 cents US on Monday, a full penny down from last Thursday. The greenback, meanwhile, was moving upwards against other currencies despite warnings by President Donald Trump that it should not be allowed to rise too far.

Economists expect slower growth in the Canadian economy in 2019 after it set a blistering pace in the first three quarters of 2018.

The Bank of Canada gives its rate decision Wednesday, and is expected to hold its benchmark at 1.75 per cent in this soft economic climate, though some economists believe it has room to move.

More important will be its assessment on the kind of growth to expect this year.

The oil and gas sector has shrunk because of mandatory oil curtailment in Alberta and mining has pulled back sharply.

The energy sector was a loser in Monday's trading, despite international oil prices firming. West Texas Intermediate crude contracts rose 79 cents to $56.59 US a barrel. The Canadian contract, Western Canada Select, was up $1.44 to $45.34 US.

Toronto stocks have risen sharply since the beginning of the year, but remain below the highs set last August.

"Even with today's decline...we're still up 11, 11.5 per cent on Toronto and New York, just in the first two months of the year, so I think the markets have been a little bit oversold," said Michael Currie, vice-president and investment adviser at TD Wealth.

With files from Canadian Press