S&P/TSX composite and U.S. stock markets end higher despite escalating trade war

TORONTO – Markets in Toronto and New York seemed unfettered by the escalating tariff conflict between Canada and the U.S. on Tuesday, as both exchanges ended higher.

“It’s not that Canada is ignoring the trade noise today, but the TSX is reminding us that sector mix still matters,” said Ashish Utarid, assistant vice-president of investment strategy at IG Wealth Management. 

“It’s composed of financials, materials, and the market itself has less direct tariff exposure,” he said.

The S&P/TSX composite index was up 243.51 points at 36,957.63, mainly lifted by the financials and basic materials sectors.

The kickoff of Canadian bank earnings season on Tuesday was one of the main drivers. Shares of Scotiabank ended seven per cent higher at $128.73 after the bank delivered a strong third-quarter profit of $2.95 billion, up from $2.53 billion a year ago. 

BMO Financial Group also reported a profit, while its executives positioned the trade conflict as an opportunity for governments to drive sweeping change around internal trade, taxes and infrastructure.

Utarid said the rhetoric from big bank executives on Tuesday signalled that escalating trade tensions could inflict short-term pain on the Canadian consumer.

But he added: “The fact that supports are being put in place by the Canadian government, it should make the effects in the short term a lot less.”

The federal government announced Tuesday a suite of retaliatory tariffs dollar-for-dollar on American goods, which are set to take effect Sept. 8. 

It comes after U.S. President Donald Trump imposed 50 per cent tariffs on about $28 billion worth of Canadian products over the weekend after trade talks collapsed. 

The October crude oil contract was down US$2.65 at US$82.36 per barrel.

“Generally speaking, we’re confident that oil will remain in this kind of range,” Utarid said. “We don’t see it dipping below US$75 from our house view.”

Overall, markets have managed to look past the geopolitical tensions brewing in the Middle East as well as in North America.

In New York, the Dow Jones industrial average was up 160.24 points at 53,577.40. The S&P 500 index was up 24.42 points at 7,677.28, while the Nasdaq composite was up 171.11 points at 26,151.30.

“The AI theme is still continuing to play out, especially in U.S. equities,” Utarid said. “That has momentum and it continues to have momentum.”

He said climbing AI stocks are a sign that investors are willing to remain in a risk-on environment. Earnings, meanwhile, are backing that risk-taking behaviour.

“As long as earnings continue to maintain this momentum, markets are going to read through some of that noise (from geopolitical tensions),” Utarid said.  

The Canadian dollar traded for 72.26 cents US, compared with 72.24 cents US on Monday.

The December gold contract was down US$3.30 at US$4,694.50 an ounce.

This report by The Canadian Press was first published Aug. 25, 2026.

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