Canada’s main stock index closed flat on Monday, as investors await earnings and look for potential trade deals between the U.S. and its key trading partners.
The S&P/TSX composite index closed up 2.99 points, or 0.01 per cent, at 27,317.00 and touched a new record high of 27,448.51.
In the latest trade development, U.S. Commerce Secretary Howard Lutnick said on Sunday he was confident that Washington could secure a trade deal with the EU, but August 1 is a hard deadline for tariffs to kick in.
However, EU diplomats said the 27-member bloc is exploring a broader set of possible counter-measures against the U.S., as hopes for a breakthrough deal with Washington dwindled.
Traders awaited clarity on U.S.-EU trade talks and looked for additional deals from major U.S. trading partners ahead of President Donald Trump’s August 1 tariff deadline.
“The market is now waiting for earnings and that’s going to be the big thing... everyone is just curious to see just how they go,” said Greg Taylor, chief investment officer at PenderFund Capital Management.
In the United States, the S&P 500 and the Nasdaq notched record high closes on Monday, lifted by Alphabet and other megacaps ahead of several earnings reports this week, while investors bet on potential trade deals to blunt economic damage from the Trump administration’s global tariffs.
Google-parent Alphabet rallied ahead of its quarterly report on Wednesday. It and Tesla, also reporting on Wednesday, kick off earnings from the so-called “Magnificent Seven,” and their results may set the tone for other heavyweight companies reporting in the next several days. Apple and Amazon each gained and helped lift the S&P 500. Verizon rallied after the telecommunications company boosted its annual profit forecast.
Analysts on average expected S&P 500 companies to report a 6.7 per cent increase in earnings for the second quarter, with Big Tech driving much of that gain, according to LSEG I/B/E/S.
“So far, companies that have reported have, in general, met or beat guidance from the prior quarter, and we haven’t seen any degradation either in corporate profits or consumer spending,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis.
With U.S. President Donald Trump’s August 1 tariff deadline approaching, the S&P 500 is up about 8 per cent year to date, with investors betting the economic damage from tariffs will be less than feared.
Trump has threatened 30 per cent tariffs on imports from Mexico and the EU, and sent letters to other trading partners, including Canada, Japan and Brazil, setting tariffs ranging from 20 per cent to 50 per cent.
According to preliminary data, the S&P 500 gained 9.63 points, or 0.15 per cent, to end at 6,306.42 points, while the Nasdaq Composite gained 82.99 points, or 0.40 per cent, to 20,978.64. The Dow Jones Industrial Average fell 3.08 points, or 0.01 per cent, to 44,339.11.
Investors focused on how tariff uncertainty is impacting the U.S. economy will scrutinize jobless claims data and the July business activity report, expected on Thursday.
They will also watch a speech by Federal Reserve Chair Jerome Powell on Tuesday for clues about when the Fed might cut interest rates, especially after mixed inflation signals last week.
Traders have largely ruled out a July rate cut, and they now see a greater than 50 per cent chance the Fed will cut by its September meeting, according to CME Group’s FedWatch tool.
- Reuters