Canada’s main stock index struggled for direction on Wednesday, as investors remained cautious on U.S. tariff negotiations with trading partners and assessed the Bank of Canada’s decision to maintain the interest rate.
The Toronto Stock Exchange’s S&P/TSX composite index was flat at 26,426.98 points. The index notched a record peak in the previous two sessions.
The U.S. doubled tariffs on imported steel and aluminum on Wednesday, the same day as the deadline for Washington’s trading partners to make their best offers to avoid hefty “Liberation Day” tariffs from taking effect in July.
Europe’s top trade negotiator said that trade talks between the European Union and the U.S. are going in the right direction.
Also on Wednesday, Trump called China’s Xi Jinping “extremely hard to make a deal with”, pointing to frictions after the White House raised expectations for a long-awaited phone call between the two leaders this week.
Meanwhile, the Bank of Canada held its key benchmark rate at 2.75%, citing the need to assess the effects of U.S. trade policy, but indicated another cut might be necessary if tariffs weaken the economy.
“The market has become a little insensitive to all the trade headlines until we have something more concrete”, said Angelo Kourkafas, senior global investment strategist at Edward Jones.
“The market is choosing to focus again on the fundamental factors…there’s been a lot of reversals in these news headlines, while at the same time economic data have continued to come in pretty strong, which has allowed the markets to look a little bit past those headlines.”
Data showed Canada’s services economy downturn eased in May, as firms grew more hopeful that trade and political uncertainty would become less of a drag on activity over the coming 12 months.
Canadian labor productivity rose by 0.2% in the first quarter.
On TSX, metal miners’ shares gained 0.7% tracking higher gold prices, while the healthcare subindex gained 0.6%.
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