Canadian stocks were dragged lower on Thursday by the energy sector after the Federal Court of Appeal ruled against the government’s approval of the Trans Mountain pipeline expansion.
The move was a major blow to the federal government, which had approved the pipeline’s expansion in 2016 and sought to buy the project from the Canadian unit of U.S. construction giant Kinder Morgan for $4.5 billion this year in order to get it built.
Energy shares overtook material stocks on the S&P/TSX composite index to lead the losses, down more than one per cent in afternoon trading.
The energy sector has the second biggest weighting on the benchmark index after the financial sector.
Overall, the Canadian market was down 0.2 per cent to 16,359.15 points, following the downtrend in the U.S. market.
Shares of Cenovus Energy were among the biggest losers, falling as much as five per cent, while Canadian Natural Resources fell 2.5 per cent.
On the other end, shares of Kinder Morgan Canada were up almost one per cent, after shareholders voted more than 99 per cent in favour of selling the Trans Mountain pipeline to the federal government.
News of the company’s approval of the sale came shortly after the federal court decision Thursday morning to quash construction approval of the pipeline.