Table of Contents
- Market Context
- What Happened
- Why It Matters
- Sector Breakdown
- Risks to Watch
- What to Watch Next
- Final Outlook
Market Context
Canadian investors begin Wednesday with several decisive events lined up and a market that is still above its year-ago level but visibly tired. The S&P/TSX Composite is about 19% higher than a year ago, though it sits roughly 4.1% below its August record of 37,069 and has gained just 0.04% over the past month. Behind that stalemate is a market pulled in different directions. Oil has swung dramatically, gold has weakened under the shadow of rate-hike expectations, and technology stocks have been volatile around earnings and AI spending concerns.
Tuesday’s session captured all of it, and the next two days carry still more catalysts.
What Happened
The S&P/TSX Composite fell 0.75%, or 269 points, to close at 35,532, and the TSX 60 declined about 1% to 2,113.56. Shopify plunged about 8% to C$200.19 after reporting third-quarter results in which gross merchandise volume and subscription revenue came in below expectations, though adjusted earnings per share topped estimates. Thomson Reuters sank about 9% amid concern that higher AI-related spending could weigh on profits. Miners reversed earlier gains as gold, silver and copper fell, with Agnico Eagle down 1.8% and Barrick down 2.2%.
Banks were subdued, energy was little changed after Monday’s plunge in oil, and Canada’s 10-year yield edged up to about 3.78%. South of the border, the S&P 500 rose 0.36% to 7,568.92 and the Nasdaq Composite gained 0.83% to 25,372.01, snapping three-day losing streaks as chipmakers rebounded, while the Dow fell 0.38%. Bloomberg Intelligence pegged third-quarter S&P 500 earnings growth at about 31%, with 83% of reporters beating estimates.
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Why It Matters
Earnings beats are not enough
Shopify’s miss on key operating metrics and Thomson Reuters’ decline show that investors are punishing companies where growth or cost expectations slip, even when profits look strong.
Macro events are stacking up
The U.S. midterm elections, the federal budget on Thursday, and ongoing Iran developments all arrive within days. Macklem told MPs that he does not see fiscal and monetary policy as being at odds, which may ease one concern.
Sector Breakdown
Financials were steady, with Royal Bank down about 0.3% and TD about 0.1%, supported by a still-favourable year-to-date trend. Energy producers were mostly flat, with Canadian Natural and Suncor roughly unchanged. Materials fell on lower metals prices, with copper down about 2.4% to near US$6.39.
Technology was the weakest group because of Shopify, though U.S. chip stocks rebounded, with Nvidia up about 2%, Broadcom 3% and the semiconductor ETF 2.5%. Industrials were mixed: Toromont slipped 0.2% despite a revenue beat, and Canadian Pacific Kansas City had reported earnings below expectations earlier in the week. Canada’s manufacturing growth at a ten-month low adds some caution.
Risks to Watch
Policy risk dominates, from the federal budget to potential further Bank of Canada hikes. Geopolitical risk remains, with oil sensitive to the U.S.-Iran process. Technology valuations are exposed to earnings and AI cost concerns. A stronger dollar and higher yields could pressure commodities. Election outcomes in the United States may shift expectations for fiscal and trade policy.
Earnings season continues to produce company-specific surprises in both directions.
What to Watch Next
Investors should watch the U.S. midterm results, Thursday’s federal budget and its deficit, oil prices and U.S.-Iran headlines, and the Fed’s tone on a December move. Further earnings from Canadian companies, Canada-U.S. trade developments and upcoming economic data will round out the calendar.
Final Outlook
The TSX is in a consolidation phase, and Tuesday’s decline fits that pattern. Strong year-over-year performance gives the market a cushion, but near-term direction depends on a cluster of events that could shift sentiment quickly.
Diversification and patience may be more useful than concentrated positions while uncertainty is this high.
Verdict: Neutral with selective opportunities. Monitor the budget, the midterm outcome and oil.
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