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Canada's TSX closed higher Friday but fell for the week as Trump tariffs on $28 billion of goods and Bank of Canada rate uncertainty weighed on investors.
Canada's main stock index, the TSX, finished in positive territory on Friday, September 25, 2026, but ended the week slightly lower than where it began, as investors weighed new U.S. tariffs, Bank of Canada guidance and mixed economic data. The Toronto market's modest weekly decline came despite a strong run in technology shares, which Adam Ludwick, director of asset allocation at NEI Investments, said gained about nine per cent over the week.
Trump Tariffs Cloud Canada Growth Outlook
Investors focused this week on a Monday speech by Bank of Canada governor Tiff Macklem, who said the unpredictability of U.S. trade policy has heightened uncertainty for businesses and could set back recent progress in the Canadian economy.
Macklem said businesses had spent the past year adapting to higher tariffs and that growth had resumed, but he noted that was before the latest escalation in the trade dispute with the United States.
The newest tariffs from President Donald Trump affect nearly $28 billion worth of Canadian goods. Macklem said that if the new U.S. tariffs remain in place, the economy's growth rate could be roughly halved in the fourth quarter to below one per cent.
Rate Hike Odds Rise After Macklem Speech
Ludwick said Macklem's speech reflected a more nuanced view of the Canadian economy compared with the central bank's September decision to hold interest rates. The Bank of Canada kept its key rate on hold at 2.25 per cent earlier in September, but financial markets have raised the odds of an interest rate hike later this year in recent weeks.
Ludwick said the speech highlighted the idea that the central bank does not want to be too late to hike rates and let inflation prove stubborn.
He pointed to the Middle East conflict as the main driver of oil prices and said that if an October rate hike materializes, it would shift conditions in Canada. He added that the market is currently pricing an October move as a coin flip.
Ludwick also said shifting headlines about the latest developments in the U.S. war with Iran affected oil prices during the week and had cascading effects on Canada.
Retail Sales Slip as GDP Stalls in July
On Thursday, Statistics Canada said retail sales fell 0.7 per cent to $73.7 billion in July as sales at general merchandise retailers slowed. The agency said its early estimate for August pointed to a gain of 1.3 per cent for that month, though it cautioned the figure would be revised.
Ludwick said the retail sales bounce was welcome, but other overhangs are weighing more heavily on investor sentiment.
He said a softer economic print could be concerning and described a difficult dynamic in which growth slows while inflation remains persistent, an environment he said is not ideal for equities or the broader economy.
Statistics Canada's preliminary estimate released last month suggested real GDP was essentially unchanged in July, as increases in the real estate and rental and leasing sector and in professional, scientific and technical services were offset by decreases in retail trade and manufacturing.
U.S. Markets Rally as Oil Prices Fall
In New York on Friday, the Dow Jones industrial average was up 478.64 points at 51,828.62. The S&P 500 index was up 39.28 points at 7,743.41, while the Nasdaq composite was up 129.34 points at 27,068.72.
The November crude oil contract was down US$2.20 at US$92.41 per barrel.
The report by The Canadian Press was first published on September 25, 2026.
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