The S&P/TSX Composite fell 90.80 points Wednesday to close at 35,491.27, its weakest finish since early September and roughly 4 percent below its August 25 high of 36,957.63. Energy names gained on crude trading above 100 dollars a barrel, but losses elsewhere in the index outweighed them after the Federal Reserve raised its policy rate for the first time since 2023.
The Canadian read is immediate. A wider Fed-BoC rate gap, now 175 basis points at the upper bound after the Bank of Canada held at 2.25 percent on September 2, is pulling capital toward US dollar assets regardless of what oil is doing. The Canadian dollar traded near a six week low against the US dollar Wednesday even with crude at its highest level since before the current conflict began.
Why Oil Strength Is Not Showing Up in the Index
Energy represents a meaningful but partial share of the TSX Composite, and Wednesday demonstrated the limit of that support. The TSX energy sub-index outperformed the broader composite through the session, but financials and rate-sensitive sectors moved against the Fed decision hard enough to pull the headline index lower regardless. A single sector rally, even a real one built on a genuine supply shock, does not offset a broad based selloff driven by a rate surprise.
The Composite has given back nearly 1,500 points since its August 25 peak, with the decline accelerating through the two weeks leading into the Wednesday Fed decision.
The TSX Composite has fallen from an August 25 high of 36,957.63 to 35,491.27, a decline concentrated in the two weeks surrounding the Federal Reserve rate decision. Source: TMX Group daily close data.
What Moves Next Depends on Two Numbers, Not One
The path forward runs through both the Fed own dot plot, which points to at least one more increase before year end, and whatever the Strait of Hormuz disruption does to oil from here. A market pricing in further Fed tightening while oil stays elevated is a genuinely different environment than the one the TSX traded in through most of the summer, and the Wednesday session was the first clean look at how the index behaves under both pressures at once.
Energy strength has provided a partial offset so far, not full insulation, and the composite closing below 35,500 for the first time since early September says the offset has limits.