A man observes a large screen displaying financial data inside the Scotiabank Plaza Concourse in Toronto on Wednesday, November 8, 2017. (THE CANADIAN PRESS/Doug Ives)
Canada’s main stock index took a heavy hit on Monday, tumbling nearly 400 points as energy, technology, and base metals led the decline. U.S. markets also suffered losses, with investors reacting to the looming tariffs set to take effect the following day.
The stock market started the day relatively stable, but as the afternoon progressed, selling pressure intensified. The downturn deepened after U.S. President Donald Trump confirmed that the 25% tariffs on Canadian and Mexican goods would proceed as planned, dashing hopes for a delay or reduction.
The new tariffs, which also include 10% duties on energy products, were originally scheduled for February but had been postponed. With the deadline now firm for March 4, Canada has vowed to respond with its own countermeasures.
Volatile Markets and Investor Uncertainty
Adelaide Chiu, vice president and portfolio manager at NEI Investments, noted that until the uncertainty surrounding these tariffs clears, markets are likely to remain unpredictable. "We're going to see volatility continue in the short term," she said.
The S&P/TSX composite index closed at 25,001.57, down 391.88 points (1.5%). Meanwhile, Wall Street faced similar turbulence. The Dow Jones Industrial Average dropped 649.67 points (1.5%) to 43,191.24, while the S&P 500 fell 104.78 points (1.8%) to 5,849.72. The Nasdaq composite took the hardest hit, sinking 497.09 points (2.6%) to 18,350.19.
Economic Pressures and Consumer Outlook
Chiu pointed out that recent earnings reports from Canadian banks suggest they are bracing for increased credit losses, reflecting growing concerns about consumer financial health. She emphasized that U.S. consumers are in a stronger position compared to their Canadian counterparts, and these tariffs could add further strain to Canada’s economy.
Despite the U.S. economy maintaining resilience even with high interest rates, signs of weakening have emerged. Economic data released Monday showed a weaker-than-expected performance in the U.S. manufacturing sector. Chiu warned that if negative trends persist, it may not signal a recession but could indicate an economic slowdown.
Key Reports to Watch This Week
Investors are closely watching Friday’s employment reports from both Canada and the U.S. Economists expect Canada’s jobless rate to tick higher, while the U.S. labour market is projected to remain steady. Additionally, upcoming earnings reports from major retailers like Target and Best Buy will offer insights into consumer spending trends.
Commodities and Currency Movements
In the commodities market, oil prices slipped while gold surged:
- Crude oil (April contract) fell $1.39 to $68.37 per barrel.
- Natural gas (April contract) climbed 29 cents to $4.12 per mmBTU.
- Gold (April contract) jumped $52.60 to $2,901.10 per ounce.
- Copper (May contract) gained 6 cents to $4.61 per pound.
The Canadian dollar edged up slightly, trading at 69.31 cents US, compared to 69.26 cents US on Friday.
