The Canadian stock market saw modest gains on Tuesday, driven by a decision from U.S. President Donald Trump to delay tariffs on Canadian goods entering the U.S. Meanwhile, the Canadian dollar strengthened against its American counterpart. The positive market sentiment was attributed to the 30-day postponement, which provides a window for negotiations and potentially averts the implementation of tariffs altogether.
Canada's main stock index experienced a modest increase on Tuesday, while the Canadian dollar regained some of its value against the U.S. dollar. This positive shift followed a decision by U.S. President Donald Trump to postpone tariffs on Canadian goods entering the U.S., which were originally scheduled to commence today. The S&P/TSX composite index concluded the day with a gain of 37.59 points, reaching a closing value of 25,279.35. Concurrently, the Canadian dollar traded at 69.71 cents US.
Ian Chong, portfolio manager at First Avenue Investment Counsel Inc., commented on the market sentiment, stating that it had improved significantly today. Following a turbulent Monday marked by market reactions to the looming trade war between Canada and the U.S. before a 30-day delay was agreed upon, markets were buoyed by the newly granted window for negotiations. This window offers a possibility of averting the implementation of tariffs altogether. Chong highlighted the importance of considering Trump's pro-growth stance, arguing that a global trade war would not be in his best interest, as it would negatively impact both the U.S. economy and the stock market, which Trump clearly prioritizes. Despite the potential resolution, Chong acknowledged that the uncertainty surrounding tariffs is likely to dampen investment sentiment for businesses, creating a ripple effect across various sectors. While tariffs have dominated the headlines recently, U.S. earnings season continues unabated. Palantir Technologies witnessed a 24 percent surge in its stock price after exceeding profit expectations and issuing optimistic forecasts amidst the ongoing investor focus on artificial intelligence. Investors eagerly await Alphabet's earnings, scheduled for after the market bell on Tuesday, and Amazon's earnings, anticipated on Thursday. Friday will bring the monthly jobs report in the U.S., a crucial economic indicator as the U.S. Federal Reserve prepares for its next interest rate decision. While the central bank maintained its key rate in January, the Bank of Canada opted for a cut, as rate hikes have had a more pronounced impact north of the border. Both banks remain on a path of easing, but the potential for tariffs casts a long shadow of uncertainty over their forecasts. Meanwhile, commodity markets also saw fluctuations: the March natural gas contract declined by 10 cents to US$3.25 per mmBTU. The April gold contract rose by US$18.70 to US$2,875.80 an ounce, and the March copper contract increased by four cents to US$4.35 a pound. This report by The Canadian Press was first published on February 4, 2025
CANADIAN DOLLAR TARIFFS STOCK MARKET DONALD TRUMP CANADA-U.S. TRADE INVESTMENT ECONOMIC OUTLOOK
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