TSX higher as Bank of Canada trims rate again

Investing.com - Canada’s main stock exchange inched higher on Wednesday after The Bank of Canada cut its benchmark interest rate by 25 basis points to 2.25%.

By mid day, the S&P/TSX 60 index standard futures contract was down 10 points, or 0.59%.

The S&P/TSX composite index 166 points or 0.55% at 30,353.07. 

Index closed higher by 0.48% at 30,419.68 on Tuesday, lifted by an increase in domestic technology industry players like Celestica and Dye & Durham. The materials sector, a major component of the commodity-heavy index, also ticked up by 0.8%, helping offset a 1.1% drop in energy shares.

Canada brought rates down for the second consecutive meeting amid mounting economic headwinds. Governor Tiff Macklem said the move reflects “ongoing weakness in the economy and contained inflationary pressures,” as Canada grapples with the fallout from escalating US protectionism.

In its October Monetary Policy Report, the central bank projected that Canada’s GDP would grow just 1.2% in 2025, followed by a modest 1.1% in 2026 and a slight pickup to 1.6% in 2027. The Bank warned that the domestic economy is undergoing more than a cyclical slowdown, describing the situation as “a structural transition” driven largely by persistent trade conflicts with the United States.

Like its counterpart in the United States is anticipated to slash borrowing costs by a quarter of a percentage point on Wednesday.

U.S. stocks gain 

The Dow Jones Industrial Average gained 140 points, or 0.3%, higher, the S&P 500 index rose 20 points, or 0.3%, and the NASDAQ Composite gained 150 points, or 0.6%. 

All three major U.S. stock indexes posted record closing highs on Tuesday, with the S&P 500 rising 0.2%, topped 6,900 for the first time ever intraday, putting it on the cusp of a major milestone at 7,000. The Dow Jones Industrial Average gained 0.3% and NASDAQ Composite jumped 0.8%.

Global sentiment has been boosted by news that U.S. President Donald Trump and Chinese President Xi Jinping are set to meet later this week, with negotiators finalizing a framework to avert new tariffs and sanctions.

Fed set to ease

The Federal Reserve’s two-day policy meeting ends later in the session, with a quarter-point rate cut all but priced in.

A prolonged government shutdown has left the Fed without most economic data, including the widely-watched monthly jobs report, to guage the health of the U.S. economy. As such, a lot of the interest will be on comments from Chair Jerome Powell for insight into how the central bank perceives the economy and the likely path of monetary policy.

Also in focus will be whether the central bank finally announces an end to its long-running balance sheet reduction program, known as quantitative tightening.

Nvidia jumps; earnings-heavy week in focus

In the corporate sector, earnings are due from software giant Microsoft, Instagram-owner Meta Platforms and Google-parent Alphabet after the close on Wall Street.

These results are set to be followed on Thursday by iPhone-maker Apple and e-commerce titan Amazon.

Such is their massive size and sway over investors that these reports stand to heavily dictate the trajectory of U.S. equities heading into the final months of 2025.

Elsewhere, Nvidia will also be in the spotlight after Trump said he plans to discuss the company’s Blackwell artificial intelligence processors with Xi, fueling speculation that Washington could ease restrictions on chip exports to China.

Trump had previously signaled that he might consider allowing Nvidia to export a downgraded version of its latest AI processor to China — a move that would mark a major policy shift and potential breakthrough in U.S.-China tech relations.

Nvidia shares rose in premarket trading. Should these gains hold, the chipmaker would become the first $5 trillion company.

Crude stable after API data

Oil prices stabilized after recent losses following an unexpected draw in U.S. oil inventories, with trading ranges tight ahead of the conclusion of a Federal Reserve meeting.

Brent futures gained 0.1% to $63.89 a barrel, and U.S. West Texas Intermediate crude futures traded 0.1% higher to $60.20 a barrel.

The crude market had suffered two straight days of losses following a report that the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, is considering increasing oil production in December.

Data from industry body American Petroleum Institute, released on Tuesday, showed U.S. crude inventories fell by just over 4 million barrels for the week ended October 24, while gasoline inventories dropped by 6.35 million barrels.

The larger-than-expected draws triggered a short-term price surge during the last trading session and supported the market early this morning.

Gold rebounds

Gold prices bounced back above the $4,000-per-ounce level after hovering near three-week lows, as market participants weighed signs of easing trade tensions against the expected Fed rate cut later in the day.

Spot gold last edged up 1.8% to $4,025.00 per ounce, while U.S. gold futures rose 1.4% to $4,039.54.

The yellow metal has slipped sharply in the last two days, reaching its lowest level since early October. Hopes for a U.S.-China trade detente took some of the shine off of gold’s safe-haven appeal, which had partly factored into a recent surge in bullion to all-time peaks.

But bets on a Fed borrowing cost reduction have helped to mitigate the declines. Lower interest rates normally support non-yielding gold, although investors are placing particular emphasis on potential forward guidance from policymakers.

If Powell signals that further cuts may be delayed or inflation remains a concern, higher real yields or a firmer dollar could dampen gold’s appeal.