TSX falls with Canada’s possible response to U.S. tariff threats in focus

Investing.com - Canada’s main stock index fell on Friday up to closing as investors assessed comments from Prime Minister Mark Carney on U.S. tariff threats.

By the 4:00 ET market close, the S&P/TSX 60 index was down 25 points or 1.6%, as investors eyed Canada’s January GDP data release.

The Toronto Stock Exchange’s S&P/TSX composite index fell 402 points or 1.6% as well. The index was flat at the end of the prior session, following its sharpest drop in almost two weeks on Wednesday.

Carney spoke briefly to the press on Friday, confirming that he spoke to U.S. President Trump in order to begin negotiations on tariff policy. He also announced a new fund dedicated to trade diversification, and called for the cooperation of different Canadian ports.

A report by Statistics Canada released on Friday revealed that Canada’s January GDP grew 0.4% in January, surpassing expectations of 0.2% growth.

Carney pledged to respond if U.S. President Donald Trump went ahead with implementing planned levies on automotive imports early next month -- a move which threatens to dent the highly-integrated North American car manufacturing sector and escalate trade tensions between Ottawa and Washington.

Canada will wait until next week before rolling out a response to Trump’s latest tariff announcement and no action is yet off the table, Carney added.

Speaking at a press conference on Thursday, Carney vowed to "fight the U.S. tariffs with retaliatory trade actions that will have maximum impact in the United States and minimum impacts here in Canada."

However, he said that longstanding economic ties between Canada and the U.S. have come to an end, flagging that tough times may lie ahead for Canadians. Canada’s economy relies heavily on exports to the U.S., leaving it particularly exposed to a trade war with its neighbor.

U.S. stocks drop lower

Meanwhile, U.S. stock indexes ended the weak on a low note, as risk appetite remained fragile in the face of Trump’s tariffs, while focus was also on key inflation data, as the Federal Reserve revealed PCE index growth.

By the 4:00 ET close, the Dow Jones Industrial Average dropped 716 points or 1.7%, and the S&P 500 slipped 112 points, or 2%. The NASDAQ Composite was the biggest loser of the day, dropping 481 points, or 2.7%.

The headline PCE price index grew 2.5% on an annual basis during the month, unchanged from January’s reading, but the widely-watched so-called "core" metric, which strips out more volatile items like food and fuel, came in at 2.8% annually, slightly above January’s revised higher 2.7%. The figure was expected to be unchanged. 

Wall Street indexes sank for a second consecutive session on Thursday, remaining close to recent six-month lows after Trump announced 25% tariffs on all foreign-made automobiles.

Trump said the levies on imported cars and light trucks into the U.S. would take effect on April 3, while further duties on auto parts would kick in on May 3. The pronouncement came ahead of the potential unveiling next week of separate reciprocal tariffs.

Crude set for weekly gain

Oil prices eased on Friday, but were still heading for a third consecutive weekly gain thanks in part to a tightening global supply outlook.

At 4:40 ET, Brent crude futures fell 1.1% to $72.53 a barrel, and U.S. West Texas Intermediate crude also dropped 1.2% to $69.11 per barrel.

Both benchmarks hit a three-week high on Tuesday, and traded over 2% higher for the week, driven by U.S. threats of tariffs on countries purchasing Venezuelan oil and gas, along with declining U.S. crude inventories.

The crude contracts are up more than 7% since hitting multi-month lows in early March.

Safe-haven demand underpins jump in gold to record levels

Gold prices hit a record high in trade on Friday, extending recent gains, as Trump’s move to announce steep tariffs on the automobile sector heightened safe-haven demand.

The yellow metal was sitting on bumper gains through March, having been boosted by deteriorating risk appetite as markets fretted over Trump’s levies and the threat of a U.S. recession. Geopolitical tensions between Russia and Ukraine, as well as a breakdown in the Israel-Hamas ceasefire has also helped fuel the flight to relative safety of bullion.

Spot gold traded up 0.9% at $3,083.00 an ounce by 4:40 ET, and gold futures expiring in May jumped 0.9% to $3,117.30/oz.

(Scott Kanowsky also contributed to this article)