Canada’s primary stock index experienced a notable decline on Friday, largely influenced by commodity-related shares. This downturn followed U.S. President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, which triggered a drop in gold prices. Additionally, concerns about supply disruptions in Iran eased, contributing to a decrease in oil prices.
Market Overview
As of 09:31 a.m. ET, the S&P/TSX Composite Index was down 1.53%, resting at 32,511.54 points. Bombardier saw a significant drop, with its shares falling by 6% after President Trump proposed a hefty 50% tariff on Canadian planes sold in the U.S.
U.S. Market Reaction
U.S. stocks also faced setbacks on Friday alongside the announcement of Warsh. Investors perceived this nomination as a hawkish move, with expectations that Warsh would support lower interest rates but avoid aggressive monetary policy easing associated with some competing candidates. Warsh’s nomination is pending Senate confirmation.
Inflation Concerns
In related economic news, U.S. producer prices showed an unexpected increase in December, indicating a potential uptick in inflation. Ipek Ozkardeskaya from Swissquote Bank noted, “There is a general sense of hawkishness in the market following the emergence of Kevin Warsh’s name.” She emphasizes that the Fed’s leadership should not override its mandate, although investors expect at least two rate cuts by the end of 2026.
U.S. Stock Indices Performance
At 09:39 a.m., the following U.S. indices reported significant declines:
- Dow Jones Industrial Average fell 113.32 points (0.23%), to 48,958.24.
- S&P 500 lost 14.11 points (0.20%), to 6,954.90.
- Nasdaq Composite decreased by 61.97 points (0.27%), to 23,621.32.
The small-cap Russell 2000 index also saw a decline of 0.3%. The CBOE volatility index, known as Wall Street’s “fear gauge,” edged up by 0.32 points to 17.2.
Corporate Earnings Update
Market reactions have been shaped by corporate earning reports. Microsoft faced its worst day since March 2020 due to disappointing cloud revenue, prompting a broad tech selloff. Other notable performances included:
- Apple’s shares fell 1.8% despite forecasted revenue growth of up to 16% for the upcoming quarter.
- Verizon shares rose by 7% after announcing a positive annual profit forecast.
- American Express shares dipped 2.5% despite projecting annual profits above expectations.
- Chevron saw a 1% increase after reporting better-than-expected fourth-quarter profits.
- Exxon Mobil shares dipped 1% despite beating Wall Street estimates.
Commodity Market Decline
The U.S.-listed gold and silver mining sector also faced pressure, with bullion prices dropping over 5% and an 11% slide in silver. Consequently, the S&P’s Material Index fell 1.3%, leading market declines.
In summary, the markets reacted strongly to Trump’s Fed chair nomination, indicating shifts in investor sentiment and future policies, particularly regarding interest rates and inflation concerns in the commodity market.
