TORONTO – Canada’s main stock index finished over 240 points higher on Wednesday, while U.S. markets gained ground as investors reacted to key interest rate decisions on both sides of the border.
The Bank of Canada left its key interest rate unchanged Wednesday as it signalled the 2.25 per cent level is about right to balance keeping inflation in check with helping the economy grow.
“There’s some stability there, even amid some of the global uncertainty,” said Adam Ludwick, the director of asset allocation at NEI Investments.
He noted that the decision was accompanied by commentary regarding trade volatility.
At a press conference on Wednesday, Bank of Canada governor Tiff Macklem said that volatility in trade and quarterly gross domestic product figures are making it more difficult to assess economic momentum.
“I think the big thing that’s up in the air right now is going to be the U.S. and Canada trade deal,” Ludwick said.
The Canada-U.S.-Mexico Agreement is scheduled to be reviewed in July of next year.
“There’s going to be a little bit of weight on that, a little bit of uncertainty around that July 1 date. But for now, it seems like there’s enough stability in the Canadian economy, and we saw that as well through the bank earnings that closed out the year pretty strong,” Ludwick said.
Last week, the Canada’s Big Six banks released their quarterly earnings. The group reported higher annual profits as Canadian banks, and the economy, largely shrugged off the effects of trade uncertainty with the United States.
The S&P/TSX composite index was up 246.48 points at 31,490.85.
Meanwhile, stock markets had been waiting to see what the U.S. Federal Reserve would do during its interest rate announcement, Ludwick said, which resulted in a quarter-point cut.
“Now that we saw that rate cut made official from the Fed and seeing how the dot plot is being positioned for 2026, I still think people may have a little bit more comfort and certainty out there and you see stocks rallied a little bit,” he said.
Wall Street loves lower interest rates because they can boost the economy and goose prices for investments, even if they have the potential of making inflation worse.
Fed Chair Jerome Powell said again on Wednesday that the central bank is in a difficult position, because the job market is facing downward pressure when inflation is facing upward pressure at the same time. That creates a dilemma for the Fed, which usually makes one of those problems worse in the short term when it tries to fix the other.
In New York, the Dow Jones industrial average was up 497.46 points at 48,057.75. The S&P 500 index was up 46.17 points at 6,886.68, while the Nasdaq composite was up 77.67 points at 23,654.16.
The Canadian dollar traded for 72.28 cents US compared with 72.23 cents US on Tuesday.
The January crude oil contract was up 21 cents US at US$58.46 per barrel. The February gold contract was down US$11.50 at US$4,224.70 an ounce.
This report by The Canadian Press was first published Dec. 10, 2025.
— With files from The Associated Press.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
