Canada’s main stock index closed lower on Friday, dragged down by weakness in industrial stocks, as investors reacted to trade uncertainty following a report that U.S. President Donald Trump was eyeing new tariffs on European Union products.
Toronto Stock Exchange’s S&P/TSX composite index closed down 72.92 points, or 0.27 per cent, at 27,314.01.
For the week the index closed 1.1 per cent higher, after hitting record highs on Thursday.
An FT report, which said the Trump administration was eyeing a tariff rate topping 10 per cent even if a wider trade deal with Europe is struck, also sent U.S. indexes lower before they partly recovered.
“It’s definitely a risk-off environment,” said Michael Dehal, a senior portfolio manager at Dehal Investment Partners at Raymond James.
“We’ve had such a great run up this week on TSX, along with the S&P and Nasdaq... you were going to get a breather on a Friday afternoon,” Dehal said.
Industrial shares fell 1 per cent, with Canadian Pacific Kansas City dropping 3.6 per cent, the most on the index.
Air Canada and Canadian National Railway dropped over 2.4 per cent each.
Healthcare stocks fell 1.5 per cent and consumer discretionary stocks declined 1 per cent.
On the flip side, utility stocks rose, boosted by Capital Power and TransAlta Corp shares adding 2.3 per cent and 1.9 per cent, respectively.
Energy stocks climbed 0.1 per cent, with Headwater Exploration and Baytex Energy rising about 3.8 per cent each.
Looking ahead, investors will assess the Bank of Canada’s Business Outlook Survey, set for release on Monday, for business expectations amid tariff-related uncertainty.
RBC analysts expect early stabilization in businesses’ expectations for future sales, input prices and hiring in the second quarter, with Canada’s duty-free exemption for trade compliant under the USMCA treaty.
“Better than feared growth and higher than wanted inflation topped with the prospect of significant fiscal stimulus spending in the year ahead — leaves a high bar for the BoC to make additional interest rate cuts this year,” RBC analysts said in a note.
South of the border, the S&P 500 and Nasdaq Composite ended largely unchanged on Friday, having dipped earlier after a Financial Times report indicated U.S. President Donald Trump was pushing for steep new tariffs on European Union products.
According to preliminary data, the S&P 500 lost 1.16 points, or 0.02 per cent, to end at 6,296.20 points, while the Nasdaq Composite gained 9.33 points, or 0.05 per cent, to 20,894.98. The Dow Jones Industrial Average fell 142.40 points, or 0.32 per cent, to 44,342.09.
Both the S&P 500 and Nasdaq have been pushed to repeated record highs in recent weeks, as investors showed increased ambivalence to Trump’s tariff threats, and confidence these policies may not damage the U.S. economy as severely as once feared.
Still, this week was seen as a proving ground for how Trump’s economic policies are filtering into the wider economy.
A raft of economic data offered mixed signals, including robust retail sales, a rise in consumer inflation, and flat producer prices for June. The University of Michigan’s Consumer Sentiment Index increased this month, although consumers were still worried about future price pressures.
Earnings season kicked off this week, giving an opportunity to U.S. corporations to showcase how tariffs were, or were not, affecting their businesses. Industrial giant 3M fell after the company said the impact of tariffs will mostly be felt in the second half of the year.
“People are a little tired of trying to trade tariff headlines or deadlines, and people are more concerned with seeing the proof of this come to fruition through numbers,” said Greg Boutle, head of U.S. equity and derivative strategy at BNP Paribas.
Of the 59 S&P 500 companies to first report second-quarter earnings this season, more than 81.4 per cent have topped Wall Street’s earnings expectations, according to LSEG I/B/E/S data. Charles Schwab was among the latest on Friday, advancing after posting higher profits. Regions Financial jumped after raising its forecasts for 2025 interest income. The week has shown, though, that beating estimates is not a recipe for trading higher. American Express outpaced second-quarter profit estimates, but its shares dropped. Netflix fell despite the success of “Squid Game” helping the company surpass earnings forecasts. The streaming company also lifted its annual revenue outlook. Elsewhere, cryptocurrency stocks, including Robinhood Markets and Coinbase Global, rose after the U.S. House of Representatives passed a bill that would develop a regulatory framework for cryptocurrencies.
Of the S&P sectors in positive territory, utilities was the biggest gainer. Energy led those in the red. It was weighed down by SLB , which dropped after reporting lower quarterly profit and a downbeat outlook, and Exxon Mobil, which slumped after losing a landmark legal battle over Chevron’s acquisition of Hess.
- Reuters