Tech leads Wall Street rebound, but TSX falls 250 points amid fragile global mood

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The Toronto Stock Exchange saw a 250-point dip Tuesday to just over 16,000 points as investors exited amid an uncertain global investment climate.

The loonie also declined for the first time in three days amid broad dollar gains as China’s central bank calmed markets by saying its currency won’t continue to
weaken significantly. USD/CAD rose 0.1 per cent to 1.3219, after touching a session low of 1.3187, according to Bloomberg data.

U.S. stocks, meanwhile, rose on Tuesday, helped by technology shares, as China stepped in to stabilize the yuan, a day after Wall Street’s main indexes suffered their sharpest one-day percentage declines of the year.

The benchmark S&P 500 and Nasdaq lost at least 3 per cent each on Monday, after China let the yuan slide, prompting the U.S. Treasury Department to label Beijing as a currency manipulator.

However, China’s move to fix the yuan at a slightly stronger rate overnight allayed fears of a further escalation in trade war that has been roiling markets since last week when President Donald Trump threatened a new round of tariffs on Chinese imports.

“The fact that China stabilized its currency gives investors some hope that this won’t accelerate into a bigger problem,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

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“Any positive response by either side that suggests some willingness to negotiate is really going to be taken well by investors.”

Trade tensions ebbed also after White House economic adviser Larry Kudlow said Trump was planning to host a Chinese delegation for further talks in September.

At 11:06 a.m. ET, the Dow Jones Industrial Average was up 88.54 points, or 0.34 per cent, at 25,806.28, the S&P 500 was up 13.31 points, or 0.47 per cent, at 2,858.05. The Nasdaq Composite was up 54.18 points, or 0.70 per cent, at 7,780.22.

The latest bout of losses has pulled the S&P 500 5.6 per cent away from its all-time high hit last month.

The technology sector, which includes companies that have a big exposure to China and were at the heart of Monday’s selloff, rose 1.05 per cent, the most among major S&P sectors.

Apple Inc gained 1 per cent after three days of heavy losses, while Philadelphia Semiconductor index climbed 0.91 per cent.

Among other stocks, videogame publisher Take-Two Interactive Software Inc jumped 8.5% after raising its full-year revenue forecast.

The materials sector dropped 0.78 per cent, weighed by a more than 10 per cent drop in scent and flavor maker International Flavors & Fragrances and fertilizer company Mosaic Co after the two companies cut full-year earnings forecasts.

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Payments processor Mastercard Inc gained 2.1 per cent after it said it would buy a majority of the corporate services businesses of Scandinavian payments group Nets for about US$3.19 billion.

Walt Disney Co was up 0.7 per cent ahead of its results after market close.

The S&P index recorded two new 52-week highs and 16 new lows, while the Nasdaq recorded 14 new highs and 106 new lows.

(c) Thomson Reuters with a file from Financial Post Staff

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