TORONTO -- Canada's main stock index dipped to its lowest level since February to start the week on heightened trade concerns, despite gold prices hitting a three-month high.
"We're seeing that trade tensions and trade concerns continue to put an element of caution in the overall equity markets," says Craig Fehr, Canadian markets strategist for Edward Jones.
Chinese and Mexican trade fears haven't disappeared but Nasdaq dipped into correction territory as the influential technology sector was hit on news that the Department of Justice might be exploring some antitrust probes affecting Facebook, Google parent Alphabet Inc. and Amazon. That drove down their shares by as much as 7.5 per cent.
"That's particularly relevant for the markets because it has been those big tech names that have led the momentum to the upside for much of this bull market," he said in an interview.
The S&P/TSX composite index closed down 21.60 points to 16,015.89, after dipping to an intraday low of 15,960,03, the lowest level in 15 weeks.
"All in all we're seeing a very modest down day in the Canadian markets. We're seeing a little bit more of pressure on the global market and the U.S. equity indexes."
In New York, the Dow Jones industrial average was up 4.74 points at 24,819.78. The S&P 500 index was down 7.61 points at 2,744.45, while the Nasdaq composite was down 120.13 points at 7,333.02.
While the technology hit pushed the sector's index down 2.66 per cent in Toronto on a 4.3 per cent drop by Shopify Inc., it accounts for a much smaller part of the market in Canada.
Health care fell 3.68 per cent and the key energy sector dropped 1.36 per cent on ongoing concerns about the impact of a slowing global economy on demand, particularly from China. This occurred despite Saudi Arabia indicating that OPEC would continue supply cuts to help raise prices.
The July crude contract was down 25 cents US at US$53.25 per barrel and the July natural gas contract was down 5.1 cents at US$2.40 per mmBTU.
Enbridge Inc. fell 4.7 per cent after a Minnesota court said state regulators must conduct a further review for Enbridge Energy's plan to replace its deteriorating Line 3 crude oil pipeline because the project's environmental impact statement doesn't address the possibility of an oil spill into the Lake Superior watershed.
The Toronto market was led by materials, which gained three per cent as Eldorado Gold was up nearly 12 per cent.
The August gold contract was up US$16.80 at US$1,327.90 an ounce and the July copper contract was up one penny at US$2.65 a pound.
The Canadian dollar traded at an average of 74.24 cents US compared with an average of 73.93 cents US on Friday.
Fehr said the loonie gained as the interest rate spread between Canada and the U.S. narrowed as American interest rates decreased on a market recalibration of growth expectations of the U.S. economy.
The Canadian stock market will remain volatile, especially through the quieter summer trading period, as long as trade tensions persist and spill over into anxiety about global growth, he added.
While trade remains a concerns, he said the fundamentals for the two countries remain good.
"The sizable gains that the North American equity markets racked up in the first four months of the year are helping provide a bit of a cushion against this pullback."