A Rally That Did Not Survive the Afternoon
The TSX Composite closed at 36,401.79 Tuesday, up just 0.09 percent, but that flat headline number understates how the session actually traded. The index held a gain of 127.82 points to reach 36,485.75 at noon as investors reacted to President Trump's overnight pause on new tariffs against Canadian goods, with the Canadian dollar adding 0.41 cents to 72.36 cents US. By the close, most of that advance had evaporated. Royal Bank fell 3.1 percent, TD Bank fell 3.5 percent, Scotiabank fell 3.3 percent, CIBC fell 3.7 percent and BMO fell 4.4 percent, a financials selloff large enough to erase the morning's tariff relief rally on its own.
Gold miners moved the opposite direction and by a wider margin. Agnico Eagle gained 10.5 percent, Wheaton Precious Metals gained 10.4 percent and Barrick added 6.7 percent as gold pushed toward $4,480 an ounce. The two moves roughly offset in index terms, which is the mechanical reason the TSX Composite finished barely changed despite two of its largest sectors moving double digits in opposite directions.
The US Session Told a Different Story
US indices fell across the board even as the Treasury Department's announcement that it would double its buyback of longer dated notes and bonds gave equities an early lift. The Nasdaq Composite fell 355.2 points, or 1.33 percent, to 26,289.71, the session's worst performer after a Wall Street Journal report described OpenAI's second quarter sales growth as tepid compared with competitors, a read that weighed on suppliers including Oracle. The S&P 500 fell 0.69 percent to 7,691.76 and the Dow fell 0.22 percent to 53,343.40. The VIX rose 4.3 percent to 15.84 as investors positioned ahead of the FOMC minutes released later that afternoon.
The TSX was the only one of the four major North American indices to finish in positive territory Tuesday, a divergence energy and precious metals strength was large enough to produce even as Canadian financials sold off in tandem with broader risk aversion.
The Nasdaq's decline was concentrated in semiconductor and AI-linked names following a report on OpenAI's second quarter sales growth. Source: Yahoo Finance, Zacks Investment Research.
Energy Did Not Move the Way the Oil Price Did
WTI crude rose 1.42 percent to $86.15 and Brent added 0.47 percent to $91.56, both climbing on Strait of Hormuz shipping risk after President Trump threatened to bomb Oman if it interferes in mediation efforts with Iran. The US energy sector, measured by the Energy Select Sector SPDR, advanced 1.8 percent on the session, the best performing S&P sector. Canadian energy producers did not track that move. Suncor fell 1 percent and Canadian Natural Resources fell 0.7 percent even as the commodity they produce rose, while Enbridge fell 2.7 percent alongside the broader industrials weakness that accompanied the financials selloff. The gap between a rising oil price and falling Canadian energy equities on the same day is worth watching into Friday's tariff deal deadline, since it suggests sector rotation and rate sensitivity are currently driving Canadian energy share prices more than the commodity itself.