Canada’s main stock index slid on Wednesday, weighed down by losses in the industrials and basic materials sectors, while U.S. markets were mixed as momentum that drove gains to start the year slowed.
Ainsley Mackie, portfolio manager at Verecan Capital Management, said she expects markets to be more volatile in 2026 than they were last year.
“We’ve seen the Canadian market extremely outperform in 2025 and we don’t think it’s realistic that the markets are going be able to keep up to that 30% return, so there’s going to be likely more volatility there,” she said.
“We also see quite a bit of geopolitical unrest. That’s impacting shorter term market outlooks.”
As lower gold prices weighed on the basic materials sector Wednesday, Mackie said she thinks it will be difficult for that segment of the market to sustain the returns it saw last year that powered the TSX to new highs.
The February gold contract was down US$33.60 at US$4,462.50 an ounce.
“Traditionally, the materials sector is the most volatile, so making a repeat of performance year after year is very difficult. I do think there’s just going to be shorter term volatility and a likelihood of not reaching the same level of returns as last year,” Mackie said.
The S&P/TSX composite index was down 271.53 points at 32,135.49.
Wall Street’s strong start to the year also eased on Wednesday.
The Dow Jones industrial average was down 466.00 points at 48,996.08. The S&P 500 index was down 23.89 points at 6,920.93, while the Nasdaq composite was up 37.10 points at 23,584.28.
Homebuilders fell sharply after U.S. President Donald Trump suggested moves to prevent large institutional investors from buying single-family homes, hoping to make it more affordable for people to buy houses.
Blackstone, a large investment company, briefly fell more than 9%, but finished 5.57% lower on the day.
Meanwhile, the U.S. stock market benefited from gains in some influential tech companies.
Nvidia and Microsoft each rose 1%.
Mackie said a “tremendous amount of capital” flowed into some of the large AI names last year and the trend is expected to continue into 2026.
“However, we feel that AI-related stocks, those expectations are overvalued,” she said.
“Because the U.S. market is so heavily concentrated in a small group of those AI-driven companies, if there is any weakness in that area, there could be an outsized impact on the overall market performance.”
Mackie said she thinks AI will remain a powerful theme over the longer term, “but not every company or valuation is actually justified.”
In the oil market, crude prices fell after Trump said Venezuela would provide 30 million to 50 million barrels of oil to the United States.
The February crude oil contract was down US$1.14 at US$55.99 per barrel.
Any additional oil flowing from Venezuela into the global system would push down crude prices by increasing their supplies. Prices for oil have swung this week following Trump’s weekend ouster of the president of Venezuela, which is likely sitting on some of the largest deposits of oil in the world.
Oil prices had already fallen back to where they were in 2021, before Trump’s move against Venezuela, because of expectations of plentiful supplies. To pull much more oil from Venezuela’s ground, though, would likely require big investments to improve aging infrastructure.
The Canadian dollar traded for 72.34 cents US compared with 72.52 cents US on Tuesday.
— With files from The Associated Press