TSX tumbles nearly 300 points while Canadian banks and manufacturers take a hit amid trade tensions
Canada’s main stock index dropped nearly 300 points, and the Canadian dollar fell to its lowest level in over 20 years as markets reacted to impending tariffs that were not lifted until after market close, according to BNN Bloomberg.
Markets in both Canada and the US opened sharply lower on Monday.
The TSX fell more than 800 points early in the session after US President Donald Trump confirmed over the weekend that tariffs would take effect on Tuesday.
“Obviously the news over the weekend, and the way it opened this morning was, you know, major to the downside,” said John Zechner, chair and lead equity manager at J. Zechner Associates.
Mid-morning, news that Mexico secured a one-month reprieve from tariffs eased market losses, sparking hope that a later call between Trump and Prime Minister Justin Trudeau might yield a similar outcome for Canada.
However, the decision to lift the tariffs for Canada came only after the markets closed.
The S&P/TSX composite index ended the day down 291.34 points at 25,241.76, with industrials and financials facing significant pressure.
Major manufacturers saw some of the biggest declines, as auto parts maker Magna International dropped over six percent, while Linamar Corp fell nearly five percent. Railways also lost ground.
Canadian banks also faced declines after Trump falsely claimed that US banks did not have access to Canada. CIBC fell 4.6 percent, Scotiabank declined 3.1 percent, and RBC dropped 2.3 percent.
Zechner noted that interpreting the market reaction has been difficult. “Where people aren’t working with actual facts, it’s hard to apply logic,” he said.
He added that the market’s volatility, driven by uncertainty, has made it challenging for investors to react effectively.
“An investor, you can’t change a lot. We’ve been reticent anyway, a little nervous about the markets and the way they’ve run, and we’ve been sort of defensive in our positions. So, I haven’t done anything today to change any of that.”
The Canadian dollar traded at its lowest level against the US dollar since 2003. Although it recovered slightly after the Mexico announcement, it traded at 68.48 cents US, down from 69.04 cents US on Friday.
Zechner noted that despite being undervalued, the loonie remains vulnerable due to a high number of short positions. “It’s well below fair value if you use the old purchasing power parity,” he said.
However, he added that speculative activity and large market flows can push the currency beyond expected levels, both downward and upward.
In New York, markets rebounded after the mid-morning news of Mexico’s reprieve.
The Dow Jones industrial average fell 122.75 points to 44,421.91, the S&P 500 index declined 45.96 points to 5,994.57, and the Nasdaq composite lost 235.49 points, closing at 19,391.96.
Commodity prices also saw movement. The March crude oil contract rose 63 cents to US$73.16 per barrel, while the March natural gas contract increased 31 cents to US$3.35 per mmBTU.
The April gold contract climbed US$22.10 to US$2,857.10 an ounce, and the March copper contract was up three cents at US$4.31 a pound.
