TSX racks up three-digit loss as markets question Trump's immigration policy

Markets react to instability in the wake of Trump's order to ban travellers from seven Muslim-majority countries and suspend refugee programs

A tote board displays the closing figure for the TSX in Toronto THE CANADIAN PRESS

A tote board displays the closing figure for the TSX in Toronto THE CANADIAN PRESS

TORONTO—The Toronto stock market suffered its biggest loss so far this year Monday as investors grew skittish over the political and economic ramifications of U.S. President Donald Trump’s recent immigration policy.

The S&P/TSX composite index fell 170.69 points, or 1.1 per cent, to 15,405.12, with all of its sectors finishing the day in the red. Energy, metals and industrials stocks took the biggest hit as nearly all commodities declined.

The Canadian dollar gained 0.10 of a U.S. cent at 76.22 cents US.

It was similarly bleak on Wall Street, as the Dow Jones industrial average lost 122.65 points at 19,971.13, while the S&P 500 dropped 13.79 points at 2,280.90. The Nasdaq composite fell 47.07 points at 5,613.71.

Late Friday, Trump signed an executive order banning travellers from seven Muslim-majority countries from entering the U.S. for 90 days and suspending the U.S. refugee program for 120 days.

The order, which was enacted swiftly, is currently being challenged in court. Thousands of protesters have gathered at airports in major U.S. cities to speak out against the bans, resulting in worries over how the policies will impact American tourism.

Canadian markets strategist Craig Fehr said the sell-off across North American equity markets reflects the higher level of political uncertainty the new policies have spurred.

“At the broadest level, a lot of the enthusiasm that has followed Trump’s election was that his pro-growth policies would not only be positive for economic growth in the states, and indirectly perhaps around the world, but that they would be implemented in fairly effective fashion,” said Fehr, who works at Edward Jones in St. Louis.

“One of the reminders we got over the weekend is that the implementation of these reforms are not going to be smooth and so the hiccups along the way are going to be treated somewhat harshly by the markets.”

Stock markets have been on a tear since Trump was elected in early November, boosted by investor confidence that the new president’s mandate will result in lower taxes, less regulation and more infrastructure spending.

Last week, the S&P/TSX index fell just short of a record-high close, while the Dow Jones industrial average broke through 20,000 for the first time. Both the S&P 500 and the Nasdaq repeatedly rallied to all-time highs.

Fehr says the policies reminded investors to not forget about the potential drawbacks for business in Trump’s policies.

“The immigration executive order hits one of the bigger risks in his policy platform, which is the protectionist rhetoric that he initiated on the campaign trail,” he said.

The volatility in equity markets sent gold, considered a safe haven during turbulent times, higher. The April gold contract gained $4.90 at US$1,196 an ounce.

In other commodities, the March crude contract fell 54 cents at US$52.63 per barrel, March natural gas contract dropped 13 cents at US$3.23 per mmBTU and March copper contracts lost three cents at US$2.66 a pound.

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