TSX gains on big banks strength

Investing.com - Canada’s main stock exchange gained Tuesday, after Scotiabank and Bank of Montreal both delivered better-than-anticipated third-quarter results offsetting sentiment hit by concerns over Federal Reserve independence. 

Toronto Stock Exchange’s S&P/TSX Composite index was up 45 points or 0.16% at 28,217.14, and the S&P/TSX 60 index standard futures contract was 2.45 points up or 0.15% around mid-day. 

Shares of Scotiabank surged 5.3% on Tuesday, while BMO gained 3.2%, after each lender reported earnings above analyst expectations, supported by improved credit performance and operating leverage.

Bank of Nova Scotia posted adjusted EPS of C$1.88, well ahead of the C$1.73 consensus, helped by better-than-forecast provisions for credit losses and strong earnings growth in Wealth Management and Capital Markets. 

Bank of Montreal posted adjusted earnings of C$3.23 per share, beating estimates of C$2.96. Although the bulk of the beat was attributed to significantly lower provisions for performing loans, particularly in the U.S., management emphasized improved credit quality and operating discipline across its North American franchise.

President Donald Trump announced late Monday that he was firing Federal Reserve Governor Lisa Cook over alleged improprieties in obtaining mortgage loans, his latest attack on the independence of the U.S. central bank.

Cook was appointed by former U.S. President Joe Biden in 2022, and responded by stating that she will “continue to carry out my duties to help the American economy."

No president has attempted to remove a Fed governor before, so just what follows from here is unclear, but it’s likely a Cook challenge to Trump’s firing will end up in the Supreme Court. 

Elsewhere, Canadian cabinet minister Dominic LeBlanc is set this week to meet with U.S. Commerce Secretary Howard Lutnick, following Canada’s recent decision to remove most of its retaliatory tariffs on American goods.

In a Bloomberg Television interview on Friday, LeBlanc expressed his belief that Canada’s decision to drop some retaliatory measures would help create a path toward a broader trade agreement with the Trump administration. 

This includes preparing for a potential renegotiation of the United States-Mexico-Canada Agreement, which is scheduled for joint review next year.

Investors will also look to the release of the July manufacturing sales, which rose 0.3% in June.

U.S. durable goods due

Back on Wall Street, aside from digesting the possible ramifications of Trump’s move against Cook, investors will also wade through a raft of economic reports later Tuesday as the September Federal Reserve meeting draws nearer.

The latest durable goods orders and consumer confidence are due, as is the Case-Shiller Home Price Index and the Richmond Fed Manufacturing Index.

Richmond Federal Reserve President Thomas Barkin is also set to speak.

Crude retreats; gold near two-week highs

Oil prices fell, handing back some of the previous session’s outsided gains as traders closely monitored developments in the Russia-Ukraine conflict for potential disruptions to regional fuel supplies.

At 12.05 ET, Brent futures dropped 2.4% to $66.83 a barrel.

Both contracts rose to their highest in more than two weeks on Monday, gaining almost 2% as Ukraine struck Russian energy infrastructure, and with traders anticipating more U.S. sanctions on Russian oil.

Gold prices rose as safe haven demand was buoyed by increased concerns over Federal Reserve independence after Trump said he was firing Governor Lisa Cook. 

Spot gold rose 0.46% to $3,433.17 an ounce, after earlier climbing to two-week highs.

The Cook firing is Trump’s latest attack on the Fed, and comes as the president seeks to gain more influence over the Fed’s rate-setting activities.