Toronto Stock Exchange Decrease Due to Legalization of Cannabis in Canada

On Wednesday October 10th, the Toronto Stock Exchange (TSX) saw its most significant decrease in eight months. The Composite index closed at 2. 15 per cent lower at 15, 517. 40, representing a drop of 336. 65. As the date for legalization of Cannabis approaches, stock markets have felt a bump in the investment towards this product this week in particular. On October 17th, the drug will be legalized everywhere in Canada. This can explain shares of Aurora Cannabis Inc. rising by 8. 6 per cent, while peer cannabis producer Canopy Growth Corp. gained 3. 6 per cent on October 12. As the end of Wednesday October 10th approached, markets generally ended on a low point.

Financial specialists made it a notable point that loan costs and bond yields were rising. Growing tensions between the United States and China were partially explained by the IMF’s decrease in developing exchange conditions between the two countries in 2019. Mentions that the interest level was increasing got many financial analysts worried. “Interest rates are a lot higher than they were a year ago, and people have to be careful in what they invest, ” said Martin Manseau, investment advisor at BMO. “Investing in the stock market is not something you do randomly with your eyes closed. ” Indeed, stocks endured noticeably their worst low in eight months on Wednesday, driven by a lofty decrease in technology stocks, because of worries of quickly rising interest rates in the latter.

What made investors most nervous however was not the hike up in investment loans, but rather, the menacing stop in growth to global economy. This is worrisome due to the fact that the United States and Mexico have signed the agreement to replace NAFTA with Canada only a few weeks ago, and if Canada becomes the weakest link, it can become an issue for the partnership since the US dollar maintains its position on gains.

On the other hand, the agreement removes some of the uncertainty surrounding North American tariffs. The stock exchange was also strongly affected by US/China economic conflict. The latter rests on a desire of a shift towards risk-free asset classes that would assure fixed income. On Friday, the Canadian dollar hit its weakest trading point in nearly two weeks at 1. 3077. The only upside to Friday’s report on the stock exchange was its gains in the healthcare and Cannabis domain, with respectively 4. 2 and 12. 2 (for the two main competitor companies) per cent gains. Some big players participating in the TSX contributed to Friday’s Composite Index that was 15, 414. 29. This indicates that the stock market is slowly getting back up from the hit that it received at the return of the long weekend.