Canada’s main stock index edged higher on Wednesday as the deadline for the U.S. to impose a 50% tariff on some $28-billion worth of Canadian goods was delayed, buying time for more negotiations.
Shortly after 10 p.m. Tuesday, less than two hours before the tariffs were set to take effect, Trump posted on Truth Social that a deal had been reached and the new tariffs were being paused for three days pending the finalization of the documents.
“I’m a bit surprised that we’re not seeing a better result there after some positive comments on the USMCA deal,” said Sadiq Adatia, the chief investment officer at BMO Global Asset Management.
He said that Canada’s main stock index may see a more positive effect once the deal is finalized. The new tariff deadline if the documents aren’t finalized is 12:01 a.m. ET Saturday.
The S&P/TSX composite index was up 33.86 points at 36,401.79.
Prime Minister Mark Carney said a draft trade deal with the United States builds on Canada’s top bilateral trade terms and “reinforces that Canadian advantage.”
On the TSX, gains in the basic materials sector offset losses in financials. The basic materials sector was benefiting from volatility and uncertainty, Adatia said.
“On the financials, they’ve had a great run this year, many of them hitting all-time highs. I think you’re seeing a bit of a breather coming through on some of the markets, and that’s putting some pressure on the financials,” he said.
In New York, the Dow Jones industrial average was up 119.65 points at 53,463.05. The S&P 500 index was up 16.22 points at 7,707.98, while the Nasdaq composite was up 41.38 points at 26,331.09.
U.S. stocks rose Wednesday after the U.S. Treasury Department announced a move that could ease pressure coming from the bond market.
Financial markets have come under growing strain as Treasury yields charged higher through the summer on worries about inflation, big government debts and other factors. That makes borrowing money more expensive for everyone, which slows the economy and undercuts prices for stocks and other investments.
Longer-term yields are set instead by investors in the bond market, who decide how much interest they need to get paid by the U.S. government in exchange for lending it money. And recently, they have been demanding more in interest to make up for the growing risks of high inflation, continued government deficits and other factors.
After the Treasury Department’s announcement, the yield on the 10-year Treasury fell to 4.64% from 4.71% late Tuesday. It, though, remains well above its 3.97% level from before the war with Iran sent oil prices and worries about inflation much higher.
The Canadian dollar traded for 72.34 cents US compared with 72.00 cents US on Tuesday.
The October crude oil contract was up 33 cents U.S. at US$84.39 per barrel.
The December gold contract was up US$124.70 at US$4,545.30 an ounce.
—With files from The Associated Press