The Canadian market experienced a significant downturn on Monday morning, prompted by a broad sell-off after U.S. President Donald Trump's decision to impose a 25% import tariff on Canadian goods, with the exception of energy products. Despite the initial impact, the market displayed some recovery after President Trump announced a temporary pause on tariffs targeting Mexico, following discussions with the Mexican President. Nonetheless, the Canadian market concluded the day on a weaker footing.
In addition to the import tariff on general goods, a 10% tariff was imposed specifically on Canadian energy products. In reaction, outgoing Canadian Prime Minister Justin Trudeau declared Canada's intention to reciprocate with 25% tariffs on over $105 billion worth of U.S. imports. The U.S. president also signaled that the European Union and the United Kingdom may become the next subjects of tariff imposition, while the EU has pledged a robust response if this occurs. The potential tariffs on Mexico have been deferred for a month due to discussions with the country's leadership.
The S&P/TSX Composite Index initially plummeted nearly 800 points to reach 24,742.92 but closed the day's trading with a reduction of 291.34 points, or 1.14%, settling at 25,241.76. Significant declines were seen in industrials, healthcare, financials, and consumer discretionary sectors, while materials stocks received a degree of support from marginal advances in metal prices.
Significant losers included Goeasy (GSY.TO) and BRP Inc. (DOO.TO), which declined by 8.3% and 7.8%, respectively. Other notable decreases were recorded by Magna International (MG.TO), Cargojet (CJT.TO), Canadian Pacific Kansas City (CP.TO), Canadian National Railway (CNR.TO), Linamar Corporation (LNR.TO), Canadian Imperial Bank of Commerce (CM.TO), CCL Industries (CCL.TO), Precision Drilling Corporation (PD.TO), and Bombardier Inc. (BBD.A.TO), with losses ranging from 4% to 6.2%.
Richelieu Hardware (RCH.TO), Cameco Corporation (CCO.TO), Rogers Communications (RCI.A.TO), EQB Inc. (EQB.TO), TFI International (TFII.TO), MTY Food Group (MTY.TO), Stantec (STN.TO), Premium Brands Holdings (PBH.TO), Bank of Nova Scotia (BNS.TO), Teck Resources (TECK.A.TO), West Fraser Timber (WFG.TO), and Royal Bank of Canada (RY.TO) saw declines between 2% and 4%.
Conversely, Equinox Gold Corp (EQX.TO) surged 8.7%, while Aura Minerals (ORA.TO) saw a 6.5% rise. Other gainers included Iamgold Corp (IMG.TO), Pan American Silver Corp (PAAS.TO), Wesdome Gold Mines (WDO.TO), Alamos Gold Inc (AGI.TO), Agnico Eagle Mines (AEM.TO), Kinaxis Inc (KXS.TO), Dundee Precious Metals (DPM.TO), Seabridge Gold (SEA.TO), Lundin Gold (LUG.TO), Waste Connections (WCN.TO), and Wheaton Precious Metals (WPM.TO), which all experienced notable increases.
On the economic front, S&P Global reported that the S&P Global Canada Manufacturing PMI decreased to 51.6 in January from 52.2 in the prior month, indicating a slower growth rate. This marked the fifth consecutive month of decline for the index.
