Michael Capolino, a trader, is seen working on the floor of the New York Stock Exchange on Friday, June 27, 2025. (Photo: Richard Drew/AP)
Canada's main stock market ended Friday in the red, following a dramatic shift in investor sentiment sparked by U.S. President Donald Trump's decision to break off trade talks with Canada. Meanwhile, major U.S. stocks market soared to new highs.
The S&P/TSX composite index dropped 59.63 points to close at 26,692.32. While it showed strength during the late morning, the momentum faded in the afternoon after Trump publicly announced he was ending all trade discussions with Canada.
His reaction came in response to Ottawa’s decision to implement a digital services tax by the end of the month.
In a social media post, Trump criticized the move, signaling a halt to negotiations that had shown some promise earlier. The unexpected announcement weighed heavily on investor confidence north of the border.
Mixed Signals for Investors
Macan Nia, co-chief investment strategist at Manulife Investment Management, described the market activity as driven by "two very different headlines." On one hand, economic data from both countries painted a fairly upbeat picture—especially data out of the U.S., showing continued consumer strength. On the other hand, the sudden freeze in Canada-U.S. trade talks injected uncertainty that rattled the markets.
Nia believes investors should take this as a reality check. “Some investors may have grown too comfortable thinking tariff issues were behind us,” he said. “But today's events remind us that trade tensions remain very real as we head into July.”
Despite the noise, Nia doesn’t expect the Trump administration to take steps that would damage the U.S. economy. “We think the U.S. will avoid policies that threaten its own growth,” he noted. “But this digital tax issue has clearly touched a nerve in Washington.”
U.S. Stocks Surge to New Highs
While the Canadian market dipped, Wall Street had a stellar day.
The Dow Jones Industrial Average jumped 432.43 points to finish at 43,819.27. The S&P 500 climbed 32.05 points to close at a record 6,173.07, while the Nasdaq gained 105.54 points to reach a historic 20,273.46.
Both the S&P 500 and Nasdaq ended the day with 0.5% gains. The rise was broad, with nearly all sectors in the green. Nike stood out with a massive 15.2% jump, despite issuing warnings about the impact of tariffs.
Investors also appeared to put geopolitical concerns aside. Earlier fears that conflict between Israel and Iran could disrupt oil supplies seemed to ease, thanks to a ceasefire still holding. Oil prices reflected that calm. The August crude contract rose just 28 cents to US$65.52 per barrel.
“There’s still a slight risk priced into oil,” Nia said, “but it’s much lower than it was a few weeks ago.”
Currency and Commodities Snapshot
Canadian Dollar: Traded at 73.12 cents U.S., slightly down from Thursday's 73.31.
Gold: Dropped sharply by US$60.40, closing at US$3,287.60 an ounce.
