S&P/TSX Composite Index Declines as U.S. Markets Surge

Rosa Saba, The Canadian Press

TORONTO — Canada’s main stock index saw a decrease on Friday, primarily influenced by lower prices in base metals and energy sectors as oil prices fell. Meanwhile, U.S. markets enjoyed a strong finish, marking their best week of the year, driven by favorable reactions following the recent elections.

According to Kevin Burkett, a portfolio manager at Burkett Asset Management in Victoria, there is a general belief that President-elect Donald Trump is supportive of business and favorable for market growth. This perspective has led to a rally focused on sectors and companies expected to thrive under his upcoming policies.

“The sectors benefiting the most from this week’s rally include financials, energy, and companies like Tesla, as investors adjust to the prospect of another four years under Trump,” explained Burkett.

On Wall Street, all major indexes reached new highs, with the Dow Jones Industrial Average rising by 259.65 points to finish at 43,988.99. The S&P 500 index gained 22.44 points, closing at 5,995.54, and the Nasdaq Composite increased by 17.32 points to end at 19,286.78.

In contrast, the S&P/TSX Composite Index closed down 86.53 points, settling at 24,759.40.

While Trump’s election is currently viewed positively for the markets, Burkett noted that the medium-term effects remain uncertain. Some of his proposed policies, particularly significant tariff increases aimed at China, could lead to inflation.

This potential inflation could complicate the U.S. Federal Reserve's efforts, as they have been reducing key interest rates since managing to lower inflation levels, including a cut announced last Thursday. A resurgence in inflation might result in a different course for monetary policy.

In Canada, where economic conditions are weaker and interest rate cuts are more pronounced, the situation could grow more complicated. Burkett emphasized, “Our economy is heavily linked to that of the U.S.”

A weakening Canadian dollar against the U.S. dollar due to Trump's policies could contribute to inflationary pressures in Canada, he continued, suggesting, “We might see increased volatility in the markets and uncertainty regarding future interest rate trends. This could make 2025 particularly interesting.”

Canada's unemployment rate has held steady at 6.5 percent as of October, providing some support for the Bank of Canada's current rate approach. The central bank has set the key rate at 3.75 percent, reduced from five percent earlier in the year.

On Friday, the Canadian dollar was valued at 71.88 cents against the U.S. dollar, down from 72.12 cents on Thursday. Additionally, the December crude oil contract fell by $1.98, reaching $70.38 per barrel, while the December natural gas contract was down two cents at $2.67 per mmBTU.

Gold and copper prices also saw declines, with the December gold contract falling $11.00 to $2,694.80 per ounce, and the December copper contract declining by 12 cents to $4.31 per pound.

— With files from The Associated Press

S&P/TSX, Stocks, Markets