TORONTO — Canada's main stock index fell almost 400 points, led by losses in energy, technology and base metals, while U.S. markets also dropped a day before U.S. President Donald Trump's sweeping tariffs on Canadian and Mexican goods are set to be put in place.
Markets were largely flat to begin the day, but began declining in the early afternoon and dropped more steeply after Trump confirmed the 25 per cent duties would not be pushed back.
There was some hope that the deadline could be delayed again, or the tariffs reduced, but Trump dashed those hopes.
The tariffs, which include 10 per cent duties on energy, were set for March 4 after being on pause for a month. Canada has said it will retaliate with tariffs of its own.
“I think until all of this uncertainty is resolved, the markets are just going to behave this way,” said Adelaide Chiu, portfolio manager, vice-president and head of responsible investing at NEI Investments.
“Markets are going to be quite volatile on a day-to-day basis,” she said.
The S&P/TSX composite index closed down 391.88 points, or 1.5 per cent, at 25,001.57.
In New York, the Dow Jones industrial average was down 649.67 points, or 1.5 per cent, at 43,191.24. The S&P 500 index was down 104.78 points, or 1.8 per cent, at 5,849.72, while the Nasdaq composite was down 497.09 points, or 2.6 per cent, at 18,350.19.
Earnings reports from the Canadian banks last week showed them shoring up for heightened credit losses amid worries over the health of the consumer, said Chiu.
“The consumer is stronger in the U.S. than they are in Canada,” she said.
“These tariffs will only bring more uncertainty to the Canadian consumer.”
However, though the U.S. economy has consistently outperformed Canada in the face of higher interest rates, prompting the Bank of Canada to cut its rates faster and deeper, some cracks are starting to show.
Recent economic reports have surprised to the downside in the U.S. The latest report Monday on manufacturing was weaker than economists expected.
“If we continue to see these numbers trend down, then there could be a concern for not necessarily going into a recession, but a softening of the economy,” said Chiu, but “it's too early to tell.”
This Friday will bring the latest update on the Canadian job market, which Chiu said is expected to tick higher. The U.S. labour report will be released the same day, and is expected to be flat, she said.
Though earnings season in Canada and the U.S. is mostly done, reports coming this week from companies like Target and Best Buy could offer more insight into how the consumer is faring, said Chiu.
The Canadian dollar traded for 69.31 cents US compared with 69.26 cents US on Friday.
The April crude oil contract was down US$1.39 at US$68.37 per barrel and the April natural gas contract was up 29 cents at US$4.12 per mmBTU.
The April gold contract was up US$52.60 at US$2,901.10 an ounce and the May copper contract was up six cents at US$4.61 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published March 3, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Rosa Saba, The Canadian Press
