Canada’s main stock exchange slipped on Friday as investors assessed a recent string of central bank interest rate decisions.
The S&P/TSX Composite index was down by 202 points or 0.64% at 31,457.84
Index rose by 169.88 points, or 0.5%, to 31,660.73 on Thursday, logging a fresh record closing high.
An uptick in metal prices propelled the commodity-heavy index higher, along with data showing that Canada posted an international trade surplus in September, reversing seven straight months of deficits.
This bolstered sentiment, which had already been buoyed by Bank of Canada Governor Tiff Macklem saying on Wednesday that the country’s economy had proven to be largely resilient to sweeping U.S. tariffs. The BoC also left interest rates unchanged earlier this week.
U.S. futures hover around both sides of the flatline
U.S. stock futures traded in a mixed fashion, with the Federal Reserve rate cut boosting overall sentiment although concerns over artificial intelligence-powered valuations weighed on the tech sector.
At 07:00 ET, Dow Jones Futures rose 49 points, or 0.1%, while S&P 500 Futures fell 16 points, or 0.2%, and Nasdaq 100 Futures dipped 164 points, or 0.6%.
Both the benchmark S&P 500 and blue-chip Dow Jones Industrial Average notched fresh record closing highs on Thursday, buoyed by a less hawkish Fed policy update than initially anticipated, but a downbeat financial forecast from cloud-computing giant Oracle exacerbated already percolating worries around the sustainability -- and eventual profitability -- of the AI boom. Fed dovish stance boosts sentiment
The Fed cut interest rates by 25 basis points on Wednesday, as expected, but Fed Chair Jerome Powell was seen striking a much less hawkish stance than feared during a post-meeting conference.
Powell also said the Fed will begin buying $40 billion in Treasury bills per month, effective immediately. Such a move stands to release more liquidity into the market, loosening monetary policy and likely boosting risk-driven assets.
Investors are still pricing in at least 50 bps of monetary easing next year on expectations that U.S. President Donald Trump’s appointee to the Fed Chair will likely be a policy dove, especially given White House economic advisor Kevin Hassett is the front-runner for the job.
BCA Research expects 2026 to be a constructive year for equities, but warns that the S&P 500’s upside is likely to be limited despite a supportive macro backdrop.
In a new outlook, the firm says “monetary easing, fiscal support, GenAI-related capex, and strong earnings growth are unequivocally positive” for stocks, but stresses that “valuations are extended,” and concerns about a bubble are “overstated.”
BCA Research forecasts the S&P 500 will end next year between 7,200 and 7,500, implying “only 5–10%” returns.
Broadcom falls on margin concerns
That said, the tech sector remains under pressure after a downbeat financial forecast from cloud-computing giant Oracle has raised concerns over the potential for over-extended valuations.
