A view of Toronto’s Bay Street Financial District with the Canadian flag on display, captured on Friday, August 5, 2022. (The Canadian Press/Nathan Denette)
Canada’s main stock index and U.S. markets closed lower on Thursday as early gains faded amid ongoing trade uncertainties.
The S&P/TSX composite index dipped 8.97 points to settle at 26,060.24, while in New York, major indexes also saw slight declines. The Dow Jones Industrial Average fell 11.31 points to 41,953.32, the S&P 500 index dropped 12.40 points to 5,662.89, and the Nasdaq composite lost 59.16 points to 17,691.63.
Markets Struggle Amid Trade Tensions
Stock markets kicked off the day on a positive note but lost momentum in the afternoon. According to Kevin Headland, chief investment strategist at Manulife Investment Management, uncertainty surrounding trade policies continues to shake investor confidence.
Since the U.S. imposed tariffs on Canadian and Mexican imports, the market has remained unpredictable, swinging between gains and losses. As the next tariff deadline approaches on April 2, investors remain cautious.
“I don’t see an end to this uncertainty in the near term,” Headland said, adding that stock movements are closely tied to trade developments. Investors are looking for positive economic signals, but concerns over tariffs continue to weigh heavily.
Impact on the Bank of Canada
The ongoing trade conflict is also influencing monetary policy in Canada. Bank of Canada Governor Tiff Macklem, speaking in Calgary, highlighted the need for a flexible approach to interest rates given the economic uncertainty.
“We need to set policy that minimizes the risk,” Macklem said. “That means being less forward-looking than normal until the situation is clearer. And it may mean acting quickly when things crystallize.”
The Bank of Canada recently cut its key interest rate to 2.75%, while the U.S. Federal Reserve decided to keep rates unchanged. So far, the U.S. economy has shown more resilience to higher interest rates compared to Canada.
Currency and Commodity Markets
The Canadian dollar traded slightly lower at 69.70 cents US, down from 69.80 cents US on Wednesday.
In commodities, oil prices rose, with the May crude oil contract gaining US$1.16 to US$68.07 per barrel. Meanwhile, natural gas prices fell, with the April contract down 27 cents US to US$3.98 per mmBTU.
Gold prices inched up, with the April contract rising US$2.60 to US$3,043.80 per ounce, while copper saw a slight increase, with the May contract adding a penny to US$5.11 per pound.
