S&P/TSX down more than 100 points after finance minister quits, U.S. markets mixed

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This article was published 16/12/2024 (343 days ago), so information in it may no longer be current.

TORONTO – Canada’s main stock index was down more than 100 points Monday as market watchers digested a surprise resignation by the federal finance minister just hours before she was due to deliver the fall economic statement.

“As a broad theme, Canada has been under pressure today,” said Tamsin Wilding, principal and portfolio manager for fixed income at Leith Wheeler Investment Counsel Ltd.

“You’ve seen that through bond yields, you’ve seen that through the currency and you’ve seen that through the equity market as well.”

The S&P/TSX composite index closed down 127.09 points at 25,147.21.

Markets never like uncertainty, said Wilding, and there was plenty of uncertainty to go around on Monday.

Finance Minister Chrystia Freeland resigned from her cabinet post Monday morning, saying she and the prime minister have found themselves at odds about the best path forward for Canada.

Markets were “in suspense” all day as they waited for the fall economic statement, added Wilding, which was pushed back by Freeland’s announcement.

“But then looming larger are these questions over the composition of the government, leadership questions and then the timing of the Canadian election and whether that would be brought forward as a result of this.”

The fall economic statement, released late Monday afternoon, showed a $61.9-billion deficit, much larger than the cap the government previously promised to keep.

However, market reaction will likely be tempered by the fact that the larger deficit is mainly due to one-time costs, including Indigenous legal claims, said Wilding.

Wilding said heading into 2025, uncertainty will be the theme for market watchers — not only in Canada, but also in the U.S. as a new president takes power, and overseas as well.

“We’re seeing pretty choppy, pretty volatile markets that don’t have a clear direction as they … wait for further clarification.”

Bank of Canada governor Tiff Macklem said in a speech Monday that the central bank is preparing for a more uncertain and shock-prone future.

U.S. markets were mixed as investors looked ahead to the U.S. Federal Reserve’s meeting this week, where the central bank is expected to cut interest rates for a third time this year.

In New York, the Dow Jones industrial average was down 110.58 points at 43,717.48. The S&P 500 index was up 22.59 points at 6,074.08, while the Nasdaq composite was up 247.17 points at 20,173.89.

Concerns over inflation’s stickiness in the U.S., including the potential inflationary impacts of president-elect Donald Trump’s tariff threats, have slimmed down bets on cuts from the Fed next year.

The Canadian dollar traded for 70.23 cents US compared with 70.27 cents US on Friday.

The February crude oil contract was down 53 cents at US$70.29 per barrel and the January natural gas contract was down seven cents at US$3.21 per mmBTU.

The February gold contract was down US$5.80 at US$2,670 an ounce and the March copper contract was down a penny at US$4.19 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Dec. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)