TORONTO – Canada’s main stock index closed down Wednesday while U.S. markets were mixed as economic data showed signs of weakness on both sides of the border.
Statistics Canada reported that the Canadian economy shrunk 0.2 per cent in February, though economists said harsh winter weather could be more to blame than tariff issues.
In the U.S., the economy shrank at a 0.3 per cent annualized pace for the first quarter to come in worse than expectations, leading to steep early-trading losses in U.S. markets over growth fears.
“It’s the reality of how all of this uncertainty surrounding tariffs is now hitting the harder economic data,” said Tamsin Wilding, principal and portfolio manager of fixed income at Leith Wheeler Investment Counsel Ltd.
While the underlying data showed spending held up reasonably well, it showed consumers were starting to pull back, she said.
“The overall picture of that economy cooling has really led to quite a classic market reaction to that softer data.”
The S&P 500 traded down as much as 2.3 per cent and the Dow dropped 780 points in early trading on the news, but both indexes recovered to modest gains by day end.
In New York, the Dow Jones industrial average closed up 141.74 points at 40,669.36. The S&P 500 index was up 8.23 points at 5,569.06, while the Nasdaq composite was down 14.98 points at 17,446.34.
The continued albeit gradual softening of trade worries, including a report on Wednesday from Chinese media that the U.S. was reaching out on trade talks, was helping ease some tensions, said Wilding.
“That maybe reinforces the de-escalation narrative in terms of global tariffs that has a bit of momentum at the moment.”
The S&P/TSX composite index closed down 32.80 points at 24,841.68.
The Canadian economic data is tracking lower than what the Bank of Canada had forecast for the first quarter, noted Wilding, building the chances that the central bank will have to react further.
For now, the market is betting on two rate cuts from the Bank of Canada this year, while the U.S. Federal Reserve could see four cuts, she said.
The fears of wavering economic growth also hit commodities.
The June crude oil contract was down US$2.21at US$58.21 per barrel and the June natural gas contract was down six cents US at US$3.33 per mmBTU.
The June gold contract was down US$14.50 at US$3,319.10 an ounce and the July copper contract was down 26 cents US at US$4.61 a pound.
The Canadian dollar traded for 72.40 cents US compared with 72.22 cents US on Tuesday.
This report by The Canadian Press was first published April 30, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
