TSX slightly higher as traders gauge U.S.-China trade agreement

Investing.com - Canada’s main stock exchange ended slightly higher on Thursday, as traders gauged a new trade agreement between the United States and China.

The S&P/TSX composite index gained 34 points or 0.11% at 30,178.98. 

Index slipped by 0.9% to 30,144.78 on Wednesday, weighed down by a cut to the Bank of Canada’s annual growth forecast.

Along with signaling an end to an easing cycle following a rate reduction down to a three-year low, the Bank of Canada also slashed its 2025 growth outlook to 1.2%, down from 1.8% in January.

U.S. stocks down

U.S. stock hunted for direction as investors digested major tech earnings, a Federal Reserve rate decision and a meeting between President Donald Trump and Chinese President Xi Jinping.

The Dow Jones Industrial Average rose 372 points, or 0.8%, the S&P 500 index dropped 16 points, or 0.2%, and the NASDAQ Composite slipped 210 points, or 0.9%.

The main averages on Wall Street notched a mixed close on Wednesday, with the blue-chip Dow Jones Industrial Average down 0.2% and the benchmark S&P 500 flat, reflecting some caution following a Fed meeting featuring an interest rate cut and uncertainty around further reductions this year.

But the tech-heavy NASDAQ Composite ticked up 0.6%, bolstered by Nvidia’s historic run that has made the artificial intelligence-darling the first company to reach a market valuation of $5 trillion.

Trump-Xi meeting in focus

Trump said he had an "amazing, outstanding" meeting with China’s Xi on Thursday, but offered little clear insight into how Washington and Beijing will temper their trade ties.

The president said he saw a trade deal with China as "pretty soon," and that there were few stumbling blocks between the two. He did not specify when the deal would be signed, but said that he will visit China in April.

Trump said there was "no roadblock at all" over rare earths, and that Washington will sign yearly deals with China to maintain supplies of the critical minerals.

He added that China had agreed to resume its purchases of U.S. agriculture goods, especially soybeans, but did not provide specific figures.

The U.S. president said he will cut his fentanyl tariffs on China to 10%, effective immediately, stating that the country will "work very hard" to stop the flow of the illegal substance into the United States.

Other U.S. tariffs against China will remain unchanged, standing around 47%, Trump told reporters.

Fed flags uncertainty about next move

The Fed trimmed its benchmark rate by 25 basis points to a range of 3.75% to 4.00%, marking its second consecutive reduction, but signaled uncertainty about further easing.

Fed Chair Jerome Powell pushed back against expectations that another rate cut in December was assured, saying it was “far from” a foregone conclusion.

He cautioned that the central bank was “navigating in the fog,” citing mixed economic signals and uneven progress on inflation. The comments tempered optimism in markets that had priced in a follow-up reduction before year-end.

"Inflation remains a concern, with the sense that tariffs could yet materially come through, but the jobs outlook looks more challenged," ING analysts said in a note.

The analysts said that they still expect another rate cut in December, adding, "It will take at least two more rate cuts next year and further dollar weakness to achieve the required platform for growth."

Tech giants earnings in focus

Investors are also working through quarterly results from several megacap technology firms that reported after the bell.

Shares of Instagram-owner Meta Platforms sank premarket after the social media giant said it would "aggressively" push to increase its spending to support its pursuit of AI that can surpass human intelligence, fueling investor worries over the eventual returns on these multi-billion dollar investments.

Google-parent Alphabet’s third-quarter revenue reached a record high as well, while net profit soared 33% versus a year ago to roughly $35 billion, as strength in its cloud computing and digital advertising operations underpinned its own proposals for sky-high AI expenditures.

Cloud and AI services bolstered Microsoft too, with the software giant even saying that it is racing to keep up with runaway demand, notably by doubling its data center footprint over the next two years.

E-commerce giant Amazon and iPhone-maker Apple report their own results after the close Thursday, continuing the theme.

Crude on track for monthly losses

Oil prices slipped lower Thursday despite the easing global trade tensions, and remain on course for hefty monthly losses on the back of ongoing oversupply concerns.

Brent futures dropped 0.6% to $63.95 a barrel, and U.S. West Texas Intermediate crude futures fell 0.6% to $60.14 a barrel.

Both benchmarks are on track for declines of more than 3% in October, which would be their third consecutive month of losses.

Traders are now focusing on a meeting of the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, scheduled for November 2, where the alliance will likely announce another 137000 barrels per day supply hike for December.

Spot gold breaks losing streak

Gold prices snapped a four-day losing streak, supported by the widely-anticipated Fed rate cut, while a lack of details on trade progress after Trump’s meeting with Xi gave some shine to bullion’s safe-haven appeal.

Spot gold was last up 1.3% at $3,980.88 an ounce, while U.S. gold futures slipped 0.2% to $3,992.22.

The yellow metal previously touched a three-week low earlier this week, plunging from last week’s record levels above $4,300/oz partly due to increased profit-taking.