Canadian Market Slides as Precious Metals See Sharp Decrease in Value

The S&P/TSX Composite Index slipped into negative territory on Wednesday, closing at 31,712.76 down 153.50 points (0.48%), as traders capitalized on gains from recent record highs in gold and silver. The pullback in precious metals prices rippled through Canadian mining stocks, creating headwinds for the broader market. Holiday-season trading remained muted with many investors holding off on significant positions ahead of the new week.

Market Headwinds: Tariffs and Trade Uncertainty

The Canadian market continues to navigate significant macroeconomic crosscurrents. Throughout 2025, the nation faced a one-sided trade conflict as U.S. tariffs of 35% targeted Canadian exports, while trade negotiations stalled abruptly. Despite these pressures, the TSX composite index delivered impressive gains of nearly 30% for the year, outperforming global benchmarks. Canadian equities demonstrated roughly twice the growth rate of their U.S. peers, with the materials sector spearheading advances.

The Canada-United States-Mexico Agreement (CUSMA) provided crucial relief for exporters seeking to bypass tariff barriers. However, renewed uncertainty looms as this trade pact approaches its renewal deadline. Trump administration signals suggest potential amendments favoring American manufacturing or possible withdrawal from the agreement altogether—a prospect that could reshape Canada’s trade landscape in 2026.

Sector Performance and Economic Backdrop

On Wednesday’s trading session, Communications Services emerged as the sole standout, gaining 0.62%, while Utilities and Consumer Staples posted modest increases of 0.17% and 0.15% respectively. The remaining eight sectors faced selling pressure, with Industrials, Information Technology, Healthcare, and Materials each declining around 0.80-0.86%. Consumer Discretionary, Financials, and Energy sectors registered smaller losses ranging from 0.23% to 0.38%.

Individual stock movements reflected the mixed sentiment. Notable decliners included Endeavour Silver Corp (down 3.87%), Aya Gold and Silver Inc (3.01%), Discovery Silver Corp (2.44%), Curaleaf Holdings Inc (2.29%), and Dye & Durham Ltd (10.13%). On the gainers’ side, BCE Inc (1.36%), Telus Corp (1.23%), Northland Power Inc (1.42%), Superior Plus Corp (1.22%), and Canada Packers Inc (0.69%) led upward movement. Energy Fuels Inc and G Mining Ventures Corp generated significant trading interest at 2.16% and 1.49% respectively.

The domestic economic calendar remained subdued Wednesday with no material data releases, allowing broader sentiment about trade policy to dominate market direction.

Central Bank Policy and Year-End Outlook

Supporting equity valuations, the Bank of Canada maintained its benchmark rate at 2.25% throughout December, maintaining consistency with inflation targets and solid labor market conditions. Bank of Canada Governor Tiff Macklem reiterated that the current policy rate remains appropriately calibrated. Most economists anticipate the central bank will hold rates steady through 2026.

Across the border, Federal Reserve meeting minutes revealed ongoing internal divisions regarding future monetary adjustments. While a majority favored additional cuts if inflation moderates, a minority preferred unchanged rates for an extended period.

Prime Minister Mark Carney’s year-end address acknowledged 2025’s challenges but emphasized national resilience. The government plans substantial infrastructure investments aimed at restoring investor confidence amid ongoing trade tensions. The combination of reduced borrowing costs and stimulus spending provides some offset to external tariff headwinds that have defined the year’s market narrative.