Canadian equities looked set to open on the back foot on Monday as persistent weakness in key commodity prices dragged on sentiment. After a sharp sell-off in metals and energy markets erased much of January’s gains, futures tied to the Toronto Stock Exchange’s benchmark pointed to a softer start, reflecting investor caution amid renewed volatility. Major precious metals, long a core driver of Canada’s resource-heavy index, extended their declines early in the day, weighing on mining shares and broader market confidence.
Gold and silver — both critical to the materials sector — suffered significant losses, contributing to broad selling pressure across related stocks. The retreat in metals followed last week’s sell-off, which rattled traders and sent miners down sharply. Meanwhile, crude oil prices also retreated, adding to concerns that energy stocks could struggle at the open.
This negative price action in commodities coincided with elevated geopolitical uncertainty and macroeconomic questions. Recent developments in U.S. monetary policy leadership expectations have pushed the U.S. dollar higher and increased volatility across global markets, complicating the outlook for commodity-linked equities. The ripple effects have been felt in Canada, where resource stocks typically draw significant investor attention and capital.
Despite these challenges, other pockets of the market have shown resilience. Financials and certain defensive sectors have managed to hold ground amid the turbulence, even as cyclical industries falter. Traders looking at early market indicators noted that broader risk assets were under pressure, with caution growing ahead of key economic data and corporate earnings updates scheduled for the week.
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Investors are also keeping an eye on any potential catalysts that could shift sentiment, including incoming economic data from both Canada and the United States. With markets increasingly sensitive to interest rate expectations and growth signals, even modest surprises in inflation or employment figures could sharply redirect capital flows.
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In this climate, many market participants expect trading to be choppy, with narrower ranges and heightened sensitivity to macroeconomic headlines. Overall, the tone at the start of the trading week suggested that Canadian stocks may struggle to gain traction until commodity prices stabilize and broader economic trends become clearer.
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