Trade Policy Turmoil Sends TSX Spiraling 1.2%

Canada’s primary stock index, the S&P/TSX Composite, faced a sharp decline on Thursday as losses in the technology and financial sectors weighed heavily on the market. The downturn was driven largely by increasing investor anxiety over the rapid shifts in U.S. trade policy, which have unsettled global financial markets.

The index closed at 24,584.04, marking a drop of 286.78 points, or 1.2%, erasing nearly all the gains from the previous trading session. Investors reacted to growing concerns that ongoing trade policy changes in the United States could create economic uncertainty, affecting business confidence and financial stability worldwide.

The sell-off was not limited to Canadian markets. In the United States, the broader S&P 500 index recorded even steeper losses, while the technology-heavy Nasdaq officially entered correction territory, having declined more than 10% from its recent peak in December. The downturn highlights the heightened volatility across global equities as market participants assess the potential impact of evolving trade policies on economic growth and corporate earnings.

U.S. President Donald Trump introduced a temporary exemption on tariffs for goods from Canada and Mexico under a North American trade agreement, granting a one-month reprieve from the 25% tariffs he had imposed earlier in the week. This move marks the latest development in a rapidly evolving trade policy landscape that has unsettled financial markets and created uncertainty for business leaders.

Shiraz Ahmed, senior portfolio manager and founder of Sartorial Wealth at Raymond James, highlighted the unpredictability of Trump’s trade decisions, emphasizing how difficult it is for investors and businesses to anticipate future policy shifts. “The challenge is that no one can really anticipate or predict what Trump is going to do at any given point in time,” he stated. He further noted that the resulting uncertainty is likely contributing to heightened market volatility. “The market and everybody are just walking on eggshells and anticipating more bad than good,” he added, reflecting the cautious sentiment among investors.

Meanwhile, Canada’s trade data revealed a significant increase in the country’s trade surplus, which expanded to C$4 billion ($2.80 billion) in January—far exceeding market expectations. The surge was largely driven by higher exports of automobiles and energy products, as companies rushed to ship goods before potential U.S. tariffs could take effect. The data underscores the tangible impact of trade policy uncertainty, as businesses attempt to navigate a rapidly shifting economic environment.

The technology sector on the Toronto Stock Exchange experienced a sharp decline, falling 3.3% on Thursday, as investor sentiment soured. Among the hardest-hit stocks was Celestica Inc., an electronic equipment manufacturer, which saw its shares plunge by 10.4%. The sector as a whole has struggled in recent weeks, now trading approximately 14% below the record high it reached just three weeks ago, highlighting the volatility in tech-related investments.

Financial stocks, which hold significant weight in the index, also faced losses, sliding 1.7% during the session. The utilities sector, another key component of the market, dropped 2% as rising bond yields put pressure on interest rate-sensitive stocks.

Meanwhile, the materials sector—which includes companies involved in mining and fertilizer production—declined by 1.1%, reflecting downward pressure on commodity prices. The drop was partly attributed to a slight dip in gold prices, which weighed on mining stocks. As a result, the sector failed to provide any cushion to the broader market downturn.