TORONTO -- Canada's main stock index fell by less than a point Thursday even as the health care sector surged on the first anniversary of cannabis legalization and the opening of the next frontier with beverages, edibles, topicals and vapes.
The S&P/TSX composite index closed down 0.88 of a point at 16,426.30.
The health care sector gained 3.7 per cent as shares of several cannabis producers climbed with Hexo Corp. rising 17.2 per cent, The Green Organic Dutchman Holdings Ltd. up 8.6 per cent, Aurora Cannabis Inc. 7.8 per cent and Canopy Growth Corp. five per cent.
While the pot names got a lift on the first anniversary of legalization, the next phase of legal products won't deliver as much of a boost for these companies as some people hope, says Allan Small, senior investment adviser at HollisWealth.
"I think you're going to have to see significant investment in this sector to really push these names higher," he said in an interview.
The euphoric rush prior to legalization saw some company shares soar 500 and 600 per cent, only to fall back in the past year, some to where they stood on Oct. 17, 2017.
Hexo Corp. enjoyed a big gain Thursday after Truss -- its joint venture with Molson Coors -- said its portfolio of pot-based drinks was set to hit the market later this year includes a CBD-infused spring water as well as beverages containing THC.
However, its shares closed at $3.81 on the Toronto Stock Exchange, down from $7.74 on the day of legalization and $1.97 on Oct. 17 2017.
Tilray Inc. shares were US$22.49 on Nasdaq, just 10 cents above where they started trading in July 2018. In the interim they climbed as high as US$214.06.
Small believes the industry is far from settled with more mergers and acquisitions in the offing.
"I think there are still too many players. I think the big ones will survive and thrive but it's going to take awhile to figure out who actually those companies are."
The energy and materials sectors were also up on the day as the price of crude oil and gold both rose.
The November crude contract was up 57 cents at US$53.93 per barrel and the November natural gas contract was up 1.5 cents at US$2.32 per mmBTU.
The December gold contract was up US$4.30 at US$1,498.30 an ounce and the December copper contract was up 0.8 of a cent at US$2.60 a pound.
The Canadian dollar appreciated after Statistics Canada reported that manufacturing sales rose 0.8 per cent to $57.6 billion in August, following two consecutive monthly declines. It traded for an average of 76.09 cents US compared with an average of 75.75 cents US on Wednesday.
In New York, the Dow Jones industrial average was up 23.90 points at 27,025.88. The S&P 500 index was up 8.26 points at 2,997.95, while the Nasdaq composite was up 32.67 points at 8,156.85.
Small said markets were helped by some good news last Friday on the trade battle between China and the U.S. and a tentative Brexit agreement Thursday in Europe. However, neither political event is resolved, prompting investors to be cautious. In addition, investors are on hold as they wait for a better picture of the quarterly results.
Early U.S. bank results were good, which helped the heavyweight Canadian financials sector, even though they fell on Thursday.
"The banks started off well, now hopefully they'll be able to pass the baton to the technology companies and they will have a good showing as well."
This report by The Canadian Press was first published Oct. 17, 2019.
