Investing.com - The Canadian stock market closed lower on Thursday as traders assessed the outlook for Ottawa’s negotiations with U.S. President Donald Trump over his punishing tariffs.
The S&P/TSX 60 Index closed 15.9 points lower, or 1%.
Canada’s main stock average, the S&P/TSX Composite, closed down 287 points, or 1.2%, erasing most of Wednesday’s gains.
On Thursday, U.S. Commerce Secretary Howard Lutnick stated on CNBC that items and services in compliance with the USMCA trade pact would be excluded from duties for one additional month. The USD/CAD and Mexican Peso hit session highs against the US Dollar Index Futures following the comments.
Underpinning sentiment was an announcement from the White House that Trump would exempt some carmakers from his 25% levies on Canada and Mexico for one month. Autos account for 12% of U.S. imports from Canada and 27% of imports from Mexico, although those figures are for all manufacturers, not just the Big Three domestic firms, analysts at Capital Economics noted.
Trump administration officials also suggested that the president is also open to hearing about other products that could be exempted from the duties, sparking hopes that the trade taxes could still be up for negotiation.
However, Trump said such exceptions do not mean that he was stepping back from his trade conflict with Canada and Mexico. Trump has said the tariffs are in response to both countries, as well as China, not doing enough to help halt the flow of migrants and illegal drugs into the U.S.
In response, Canada said it is postponing the second phase of its retaliatory tariffs against the U.S. after President Trump temporarily exempted Canadian and Mexican goods from his administration’s tariffs. Initially set for March 25, Canada’s 25% counter-levies on C$125 billion worth of U.S. products, including cars, steel, and aluminum, will now take effect on April 2. However, tariffs on C$30 billion of U.S. imports, implemented earlier in the week, will remain in place.
U.S. stocks slip
On Wall Street, U.S. stocks fell sharply as investors assessed the fresh tariff actions, and the ’recession’ word is more casually thrown around.
The Dow Jones Industrial Average closed down 428 points, or 1%, The S&P 500 sank 104 points or 1.8%, and NASDAQ Composite had retreated by 483 points, or 2.6%.
Data released earlier Thursday showed that the number of Americans filing new applications for unemployment benefits fell more than expected last week, dropping 21,000 to a seasonally adjusted 221,000 for the week ended March 1.
Yet despite this relative good news, Philadelphia Federal Reserve President Patrick Harker said on Thursday that trouble may be brewing for a U.S. economy that is currently in good shape but showing signs of stress in the consumer sector and risks to the inflation outlook.
Oil prices tick up
Oil prices edge higher.
At 4:30 PM ET, West Texas Intermediate crude oil futures (WTI) rose 0.05% to US$66.36 a barrel, while the Brent contract rose 0.29% to US$69.50 a barrel.
Brent plunged 6.5% in the previous four sessions, dropping to its lowest since December 2021 on Wednesday, while WTI fell 5.8% over the same period to its lowest since May 2023.
Gold dips
Gold prices dropped, as analysts said investors were moving to take profits following a three-day rally in the traditional safe-haven asset.
As of 4:30 PM ET, gold futures was down US$9.20, or 0.3%
Markets were also gearing up for the U.S. jobs report this week, which could provide more clues into the state of the U.S. economy. Recent data have suggested that activity could be sputtering, a trend that may have an impact on the Federal Reserve’s interest rate path.
In currencies, the U.S. dollar index, which measures the greenback against a basket of currency peers, weakened slightly, dipping to a four-month low amid the uncertainty over the effect of U.S. trade policy.
Elsewhere, Bitcoin was 1% lower after an initial ascent on Thursday, extending recent losses as Trump’s concessions aided some risk sentiment.
(Scott Kanowsky also contributed to this article)