TSX fall after BoC signals at easing pause; Fed rate decision awaited

Canada’s main stock index fell on Wednesday as investors digested the Bank of Canada’s cautious tone, even as the central bank delivered its second consecutive interest rate reduction.

At 10:22 a.m. ET, Toronto’s S&P/TSX composite index was down 0.3% at 30,349.11 points.

The BoC reduced its key overnight interest rate to 2.25%, as widely expected. The second consecutive quarter-point cut brings down the rate to the lowest since July 2022.

However, it signaled this could mark an end to its cutting cycle unless the outlook for inflation and the economy changed.

“I don’t read it as too hawkish and I welcome the interest rate cut,” noted Matt Skipp, president of SW8 Asset Management.

“Outside of the disruption from tariffs and rhetoric out of Washington, the underlying bigger concern would be weakness in construction and real estate, which should keep the Bank of Canada cutting rates in the short term.”

Later at 2:00 p.m. ET, the U.S. Federal Reserve is expected to implement a similar 25-basis-point rate reduction, guiding the U.S. economy with limited economic data following nearly a month of government shutdown.

On the TSX, consumer staples and consumer discretionary led the downward momentum, falling 1.8% and 0.8%, respectively.

Industrials also dropped 0.8%, while rate-sensitive sectors such as financials, real estate and utilities were also trading in the red.

Bucking the trend, materials gained 1.4% with gold rebounding nearly 2%.

Materials stocks have been instrumental in driving the resource-heavy Canadian benchmark’s about 23% gains this year, as gold prices have surged over 50%.

Energy sector gained 0.8% as oil prices also climbed, supported by decreasing U.S. crude inventories and optimism surrounding upcoming talks between U.S. and Chinese leaders.

U.S. President Donald Trump began the final leg of his Asia trip, saying he had reached a deal with South Korea and was optimistic about an agreement with China.

Earlier on Wednesday, Trump stated he “didn’t come to South Korea to see Canada,” amid an ongoing trade spat between the North American neighbors.