Dylan Halvorsan, a trader, is seen at work on the floor of the New York Stock Exchange on Wednesday, April 16, 2025. (AP Photo/Richard Drew)
Canada’s main stock index edged higher on Wednesday, thanks to gains in the energy sector, even as U.S. stock markets faced sharp losses. The upward momentum came after the Bank of Canada decided to keep its benchmark interest rate unchanged at 2.75 percent, choosing to wait for more clarity around U.S. trade policy.
Meanwhile, south of the border, major U.S. indexes took a steep dive. Tech stocks led the decline, especially chipmaker Nvidia, which dropped nearly 7 percent after revealing that new American restrictions on exports to China could slash billions from its future revenue.
Nvidia’s plunge set the tone for the broader market, dragging major indexes down. The Dow Jones Industrial Average closed 699.57 points lower at 39,669.39. The S&P 500 dropped 120.93 points to 5,275.70, and the tech-heavy Nasdaq shed 516.01 points, finishing at 16,307.16.
Dustin Reid, vice-president and chief strategist for fixed income at Mackenzie Investments, noted that increased market swings are forcing investors to pull back. “As volatility rises, risk managers often cut positions,” he said.
Unlike its U.S. counterparts, the S&P/TSX composite index in Toronto climbed 38.89 points to settle at 24,106.79. The index’s lower exposure to the tech sector helped cushion it against the kind of downturn Wall Street saw, with energy shares providing solid support.
On the U.S. monetary policy front, Federal Reserve Chair Jerome Powell addressed the impact of President Donald Trump’s tariffs. Powell acknowledged the new trade measures look more aggressive than initially thought. However, he signalled that the Fed still needs time before deciding whether to adjust interest rates.
Markets reacted sharply after Powell’s remarks, possibly because many investors were hoping for more encouraging signs of a rate cut. Instead, his cautious tone left them unsettled.
In Canada, the Bank of Canada stayed firm after several previous rate cuts. Governor Tiff Macklem explained that uncertainty around the U.S. government’s shifting trade stance influenced their decision. He pointed out the unpredictable nature of the new tariff policies, saying, “We still don’t know what will stick, what may ease, or how long the situation will continue.”
Macklem added that the bank will monitor the impact of tariffs, especially as they are often linked to rising inflation and slower economic growth. Reid believes there could still be one or two more rate cuts later this year, depending on how inflation and trade dynamics play out.
Currency markets also showed movement. The Canadian dollar rose slightly, trading at 71.99 cents U.S., up from 71.77 cents the previous day.
In commodities, the June crude oil contract climbed $1.08 to $61.83 per barrel. Gold jumped significantly, gaining $106 to close at $3,346.40 an ounce. Copper and natural gas prices also shifted, with copper rising six cents to $4.69 per pound and natural gas dipping eight cents to $3.25 per mmBTU.
