TSX runs higher on rate cut expectations
Investing.com -- Canada’s main stock index continued its fall on Monday after suffering its worst day in trading since March 2020 on Friday. Investors have sold off since U.S. President Donald Trump’s announcement of a raft of new tariffs last Wednesday, with many seeing an all-out trade war and global recession on the horizon.
By the 4:00 ET close, the S&P/TSX 60 Futures fell 20.6 points or 1.5% on Monday, following Friday’s fall of 65 points, or 4.4%.
The Toronto Stock Exchange’s S&P/TSX Composite index dropped 334 points or 1.4%, having fallen 1,142 points, or 4.7% on Friday.
Trump announced his broadest slate of tariffs to date on Wednesday, saying he would slap a baseline 10% duty on all foreign imports into the U.S. and impose greater levies on several longstanding trading partners in a bid to respond to perceived unfair trade practices.
The broad tariffs took effect on April 5, with the country-specific hikes starting April 9.
In turn, China announced a 34% tariff on all U.S. imports on Friday, coming into effect April 10.
Today, Trump threatened to add 50% to China’s tariffs if the country does not rescind its tariff hike by April 8.
The President also held a news conference with Israeli Prime Minister Benjamin Netanyahu, in which Trump indicated that his reciprocal tariffs could be permanent, but that he is also open to negotiations.
Japan was among the first to the negotiating table, as Nikkei reported that U.S. Secretary Scott Bessent has been assigned to lead trade discussions with the country. Later on Monday, Bessent said in an interview on Fox Business that he expects Japan to be prioritized in negotiations due to their early approach.
Trump urged Federal Reserve Bank Chairman Jerome Powell to cut interest rates on Friday, asking the Chairman to "stop playing politics." Powell spoke shortly after, stating that the economic impact of tariffs is "likely larger than expected" and signaling a cautious monetary policy.
Trump had previously rolled out a string of other tariffs that are now in effect, including a 25% import levy on goods from Mexico and Canada not deemed to be in compliance with the U.S.-Mexico-Canada Agreement -- a trade accord signed during Trump’s first term. Energy products and potash received a 10% tariff. Neither country will be subject to any new tariffs beyond these.
A 25% tariff on Canadian steel and aluminum also remains in place.
In response, Canada Prime Minister Mark Carney declared on Thursday that Canada is implementing 25% tariffs on all vehicles and non-Canadian vehicle content imported from the U.S. that are not compliant with the CUSMA (USMCA) trade pact. Carney alleged that total funds raised from Canada’s tariffs could reach CAD$8 billion, and all funds will go to the autoworkers and companies affected.
U.S. stocks miraculously mixed
U.S. stock indexes continued the falling trend set last week, but had a volatile rebound midday on false reports. This comes after Thursday and Friday’s results, which was the worst two-day decline for the bellwether S&P 500 index since March 2020.
By the 4:00 ET close, the S&P 500 fell by 11.8 points or 0.2%, and the Dow Jones Industrial Average lowered by 350 points points or 0.9%. However, the NASDAQ Composite surprisingly gained 15.5 points or 0.1%.
In Friday’s trading, the Nasdaq dropped 962.8 points or 5.8%, the S&P 500 sank by 322.5 points or 6%, and the Dow decreased by 2,231.1 points or 5.5%.
Monday’s trading session saw an abrupt shift in the trajectory of Wall Street’s main indexes following an unconfirmed report from the White House that a 90-day pause on tariffs was under consideration. Indexes jumped as much as 7% before the White House refuted the claims, which seemed to stem from a popular X account. The indexes dropped back down shortly after.
Crude Oil WTI Futures prices drop
Oil prices slid on Monday after falling sharply on Friday, with the tariffs raising concerns over the prospects for global fuel demand.
By 5:20 ET, Brent Oil Futures dropped by 0.2% to $64.27 a barrel after suffering steep declines on Thursday and Friday.
U.S. West Texas Intermediate crude futures fell 1.7% to $60.96 a barrel.
Gold eases from record highs
Gold prices were mixed on Monday, following a record high reached on Thursday.
Trump’s tariffs sparked a severe risk-off move in broader financial markets, underpinning a flight to the perceived safety of assets like gold and the Japanese yen. Gold also benefited from a decline in the dollar.
As of 5:20 ET, XAU/USD was down 1.8% to $2,982.03/oz. Gold Futures dropped 1.2%, pricing in at $2,998.80/oz.
In last Thursday’s trading, Spot gold hit a record high of $3,168.04 an ounce, while gold futures expiring in June hit a peak of $3,201.60/oz.