TSX rises after Canada’s GDP growth snaps three-month decline

Investing.com - Canada’s main stock index rose on Friday, snapping a three-session losing streak, after data showed the economy returned to growth in July.

The S&P/TSX Composite index ended 29 points or 0.10% higher at 29,761.28. 

Index fell by 0.1% on Thursday, ending at 29,731.98, as a retreat from a recent all-time peak extended into a third straight session. Canada’s tech sector weighed on the average, with shares of Constellation Software in particular declining by 6% after the firm announced the departure of its president.

Canada’s economy posted modest growth in July, with real gross domestic product rising 0.2%, its first positive movement in four months. The rebound was led by a robust recovery in goods-producing industries, which expanded by 0.6% after three straight months of contraction.

U.S. stocks gain

U.S. stock index gained as investors digested a flurry of new trade tariffs from President Donald Trump, and the release of key inflation data.

The blue-chip Dow Jones Industrial Average had climbed by 300points, or 0.65%, the benchmark S&P 500 had risen by 38 points, or 0.59%, and the tech-heavy Nasdaq Composite had increased by 99 points, or 0.44%.

The main Wall Street indices registered a third straight session of losses on Thursday, after hot economic data, including a decline in weekly jobless claims and an upward revision in second-quarter gross domestic product, dented bets around the scope of potential additional Federal Reserve borrowing cost cuts over the rest of 2025.

Markets were also on edge over a looming government shutdown, amid limited bipartisan efforts to push through at least a stopgap spending bill. 

PCE inflation meets expectations

The August PCE price index data, the Fed’s preferred inflation gauge, was released earlier Friday, and investors have been boosted by the numbers coming in largely as expected amid fears that the Trump administration’s tariffs policies would lead to higher prices. .

The underlying measure of PCE inflation cooled to 0.2% month-on-month and matched July’s pace of 2.9% on an annualized basis, as widely expected. Fed policymakers often closely monitor this metric to judge the state of price gains in the world’s largest economy.

Cautious comments from Federal Reserve Chair Jerome Powell have weighed on markets this week, with Powell flagging persistent concerns over a cooling labor market and sticky inflation.

Data released on Thursday highlighted some strength in the world’s biggest economy. Second-quarter gross domestic product data was revised upwards to reflect much stronger growth in the economy than initially expected. 

Trump announces new tariffs

Elsewhere, President Trump announced a flurry of trade tariffs late Thursday, most notably a 100% levy on all “branded and patented” pharma products, although drugmakers building manufacturing facilities in the U.S. will be exempt from these levies.

He also unveiled a 25% tariff on heavy trucks, a 50% tariff on kitchen and bathroom fittings, and a 30% tariff on upholstered furniture.

Trump’s pharma tariff threats had drawn billions of dollars in U.S. investment from major global drugmakers earlier this year.

Thursday’s duties are the latest in Trump’s sectoral tariffs, with the president having imposed steep levies on several sectors, including automobiles, steel, and electronics, earlier this year.

Major pharma stocks, such as Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE) and Eli Lilly (NYSE:LLY), will be in the spotlight Friday as a result.

The tech sector could also be in focus after the Wall Street Journal reported that White House is considering a new policy that would require U.S. tech firms to match their domestic semiconductor output with imports or face tariffs.

The proposed plan could hit foreign tech stocks by curbing U.S. demand for overseas semiconductors, pressuring margins, and adding to trade uncertainty.

Crude set for weekly gains

Oil prices were stable, on track for a substantial weekly gain, as attacks to Russia’s energy infrastructure and a surprise drop in U.S. crude inventories tightened the market outlook.

At 07:02 ET, Brent futures dropped 0.1% to $69.35 a barrel, and U.S. West Texas Intermediate crude futures fell 0.2% to $64.86 a barrel.

Both benchmarks have jumped around 4% this week, their biggest increase since the week ended June 13.

Gold mostly steady

Gold prices were broadly steady after a recent retreat from record highs.

Anticipation ahead of the key PCE data kept gold relatively well-bid. Stubbornly elevated inflation may give the Fed less impetus to cut interest rates.

Still, the yellow metal was sitting on weekly gains after notching a series of recent all-time peaks, bolstered partially by hopes for further Fed rate reductions this year. Bullion tends to perform better in an environment of lower borrowing costs.