Canada's main stock index, the S&P/TSX composite, fell more than 150 points on Wednesday, with losses spread across multiple sectors as U.S. stock markets also moved lower.
The decline came amid a broad-based sell-off that dragged down major indices on both sides of the border. The Toronto market was weighed by losses in energy, financial, and industrial stocks, while U.S. benchmarks including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite also retreated.
Investors appeared to be reacting to a mix of factors, including renewed trade tensions and concerns about economic growth. The drop in the TSX followed a technical recession announcement for Canada earlier in the week, which prompted fresh political rhetoric from U.S. President Donald Trump reviving threats to make Canada the 51st state.
Market movers
On the TSX, energy stocks were among the biggest decliners as crude oil prices slipped. The financial sector also lost ground, with major bank shares trading lower. Industrial and materials stocks added to the downward pressure.
In the United States, the S&P 500 fell by approximately 0.8%, while the Dow lost over 200 points. The tech-heavy Nasdaq dropped about 1.1%, led by declines in major technology companies.
Broader economic context
The market moves come as Canada's economy slipped into a technical recession, defined as two consecutive quarters of negative GDP growth. This development has intensified political debates and raised questions about the effectiveness of current economic policies.
Trade tensions have also resurfaced, with President Trump reviving his threats to impose tariffs or pursue annexation rhetoric. Canadian officials have pushed back, emphasizing the importance of the Canada-U.S.-Mexico Agreement (CUSMA) and bilateral trade relations.
Meanwhile, commodity prices have been volatile, with aluminum and lumber facing headwinds from global oversupply and weaker demand. The energy sector continues to grapple with fluctuating oil prices amid uncertainty about OPEC+ production decisions and global demand forecasts.
Investor sentiment
Market analysts noted that investor sentiment remains fragile, with many participants adopting a cautious stance ahead of upcoming economic data releases and central bank meetings. The Bank of Canada is expected to provide further guidance on interest rates, while the U.S. Federal Reserve's next policy decision is also closely watched.
Currency markets saw the Canadian dollar weaken against its U.S. counterpart, trading around 73.50 cents U.S., down from earlier levels.
The sell-off was broad, with declining issues outnumbering advancing ones by a wide margin on both the TSX and U.S. exchanges.
