TORONTO — North American stock markets partially recovered from deep losses Thursday amid falling oil prices and worries that the arrest of a senior executive at Chinese telecom equipment maker Huawei could derail progress in China-U.S. trade talks.
Nervousness pervaded markets early as hopeful signs about a trade truce between the world's two largest economies disappeared overnight with the arrest, said Candice Bangsund, portfolio manager for Fiera Capital.
"Markets have just been whip-sawed today, right at the open the market just collapsed a couple per cent. It seems to be making up a little bit of ground here this afternoon but it looks like it's still going to be a sea of red across equity markets today," she said in an interview.
Bangsund said there have been no signs yet of a pullback in the agreement reached at the G20 meeting or retaliation from China.
"But I think that there's just a lot of speculation that this is going to sour the relations between the U.S. and China at a very sensitive time."
In addition, ongoing uncertainty about crude production after an agreement wasn't reached at Thursday's OPEC meeting in Vienna weighed on crude prices and equity markets.
The S&P/TSX composite index closed down 1.6 per cent, losing 245.64 points to reach a five-week low of 14,937. At one point in the day, the TSX lost more than 400 points to reach 14,773.86.
The influential energy sector was the big loser, falling 5.4 per cent to wipe out Wednesday's gains. Other key sectors including industrials, financials and materials were also down.
Health care closed up 6.6 per cent as cannabis producer Aphria Inc. rebounded from three days of share losses with a 51 per cent gain on the day after a special committee of independent directors was appointed to review the company's acquisition of LATAM Holdings Inc., which has been criticized by short-sellers.
Energy shares fell as the January crude oil contract was down US$1.40 at US$51.49 per barrel.
An OPEC meeting was adjourned until Friday to hammer out some sticking points, including how much oil production Russia would agree to cut.
Bangsund expects production will be cut, but it's not clear if oil producing countries will achieve the 1.5 million barrels per day cut expected by analysts.
"So if we did get some good news tomorrow at around lunchtime or even before on hints of an amicable agreement to cut production by more than one million barrels per day you're going to see a pretty sizable rebound in crude prices, which of course spillover into the TSX."
The recovery in U.S. markets was even more pronounced.
In New York, the Dow Jones industrial average rebounded from a 780-point plunge to lose 79.40 points at 24,947.67. The S&P 500 index fell just 4.11 points at 2,695.95, while the Nasdaq composite gained 29.83 points to 7,188.26 after being in the red for much of the day.
The Canadian dollar traded at an average of 74.60 cents US compared with an average of 74.89 cents US on Wednesday.
The January natural gas contract was down 14.2 cents at US$4.33 per mmBTU.
The February gold contract was up US$1 at US$1,243.60 an ounce and the March copper contract was down 3.1 cents at US$2.74 a pound.
Gold gained in a flight to safety, said Bangsund.
"Investors are seeking out a haven from some of this nervousness out there, so gold has offset that somewhat but not enough to get the TSX back into positive territory."
Companies, index and currencies in this story: (TSX:APHA, TSX:GSPTSE, TSX:CADUSD=X)
Ross Marowits, The Canadian Press