The TSX Composite fell 584 points on Wednesday, its steepest single session decline in more than three months, as a hawkish Federal Reserve rate decision and a sudden reversal in metals prices hit mining shares hard. Thursday brought a smaller decline, down 44.97 points to 35,706.46. Client calls this week are not being shaped by where the index sits. They are being shaped by the shape of the week itself.
The Availability Heuristic, Not Simple Recency
Amos Tversky and Daniel Kahneman described the mechanism in 1973. People judge how common or important an event is by how easily an example comes to mind, not by its actual frequency. A single 584 point session is vivid, specific and easy to recall. The five quieter sessions in the two weeks before it, several of which closed above 36,000 and one of which set a fresh high on September 22 at 36,335.61, do not carry the same weight in memory even though they belong to the same data set.
This is a sharper mechanism than plain recency bias. Recency bias says recent events get more weight. The availability heuristic explains why: vividness, not recency alone, is what makes an event easy to retrieve. A large, sudden, well reported drop is more available in memory than a string of ordinary up days, regardless of which happened more recently.
What Actually Moved the Index
The proximate cause was rate policy divergence, not a broad flight from risk. Federal Reserve Chair Kevin Warsh delivered the first US rate increase since 2023 on September 16, lifting the target range to 3.75 to 4.00 percent, and the accompanying projections showed 16 of 19 policymakers expecting at least one further increase this year. The Bank of Canada, by contrast, has now held its overnight rate at 2.25 percent through seven straight decisions, most recently on September 2, citing the Middle East conflict and the breakdown in Canada-US trade talks as reasons for caution.
That 175 basis point gap pushed the Canadian dollar toward a seven week low against the US dollar and lifted Government of Canada bond yields, which in turn pressured the rate sensitive mining names that make up a large share of the TSX. Copper alone fell more than 5 percent in a single session earlier in the month on the same dynamic. Wednesday concentrated weeks of that pressure into one session.
WTI crude, meanwhile, closed at 93.98 US dollars on Thursday, still elevated by continuing disruption in the Strait of Hormuz, a separate story the Geopolitical Desk covers in full today. Energy names were not the source of Wednesday pressure. Metals were.
The shaded region marks the four sessions from September 21 through September 24, when the widening Bank of Canada and Federal Reserve policy gap drove the sharpest weekly move of the month.
The Research on Why the Drop Still Stings
Even once the mechanism is explained, the emotional weight of Wednesday does not fully dissolve. Kahneman and Tversky, publishing in 1979, found that losses are felt roughly twice as intensely as equivalent gains. A portfolio that gave back a portion of a strong September still registers, psychologically, as more painful than the September gain felt rewarding. Clients are not wrong to feel something. They are working from an incomplete sample when they extrapolate from one session to a trend.