A signboard is seen at the Toronto Stock Exchange. Photo Credit: THE CANADIAN PRESS/Chris Young
On Thursday, Canada’s main stock index closed in the red as investors reacted to earnings updates and key economic data. The S&P/TSX composite index fell by 110.18 points, settling at 27,259.78, weighed down by declines in utilities, tech, and energy sectors. Meanwhile, U.S. markets also slipped, partially due to routine end-of-month portfolio adjustments.
In the U.S., the Dow Jones Industrial average dropped 330.30 points to 44,130.98. The S&P 500 fell by 23.51 points to 6,339.39, and the Nasdaq eased slightly by 7.22 points to 21,122.45.
Profit-Taking and Month-End Rebalancing at Play
Michael Currie, a senior investment adviser at TD Wealth, explained that the market has had a strong streak lately—three months of steady gains, particularly in the U.S. He believes that Thursday's dip was largely due to end-of-month activity where investors rebalance their holdings.
“Markets started strong with positive earnings from Microsoft and Meta but softened later in the day,” said Currie. “Some oil weakness and sector shuffling might have prompted a bit of profit-taking.”
Tech Giants Boosted by Strong Earnings
Meta Platforms surged by 11.3% after exceeding Wall Street's expectations on both revenue and profit. Despite heavy investments in artificial intelligence, the company delivered impressive quarterly results. Microsoft also posted a 4% gain, buoyed by its Azure cloud platform’s strong performance, highlighting the tech sector's focus on AI expansion.
Energy Sector Drags Down TSX
Currie noted that weaker energy prices pulled down Canada’s TSX index, which is more heavily weighted in oil and gas than U.S. markets. “Energy’s been under pressure throughout the year, and today continued that trend,” he said.
Crude oil for September delivery dropped by 74 cents to US$69.26 per barrel. This softness in oil prices is one reason the TSX underperformed despite positive corporate earnings in some sectors.
TC Energy Shines Amid Global Uncertainty
Despite broader market caution, TC Energy posted strong quarterly results. The pipeline giant reported a year-over-year profit increase, driven by growing demand for natural gas transport. “They beat last year’s numbers and even raised their earnings forecast,” said Currie. The company’s stock climbed 1.75% following the news.
Trade Tensions Simmer in Background
Although trade tensions have loomed large in past months, Currie suggested that markets are not overly focused on trade issues at the moment. With U.S. President Donald Trump threatening tariff hikes, many countries rushed to clarify trade agreements before the looming Friday deadline.
Trump mentioned entering a 90-day negotiation phase with Mexico while keeping the existing 25% tariffs intact—lower than the previously threatened 30%. Talks with Canada, however, appear to be less promising. “Canada seems to be the slowest moving of the major trading partners,” said Currie, though he expects a resolution eventually.
Currency and Commodities Update
The Canadian dollar weakened slightly, trading at 72.23 cents US compared to 72.41 cents US a day earlier. Statistics Canada reported that the economy shrank in May, but the quarter may still end flat overall.
Meanwhile, December gold futures dropped by $4.20 to US$3,348.60 per ounce.
