Canada’s Stock Market Declines Amid U.S. Tariff Uncertainty

March 21 (Reuters) – Canada’s main stock index, the S&P/TSX composite index, closed lower on Friday, giving back some of its weekly gains as concerns over U.S. trade tariffs resurfaced. The index dropped 91.75 points, or 0.4%, ending at 24,968.49. However, despite Friday’s dip, the index posted a 1.7% weekly gain, marking its biggest rise since November.

Market Movement & U.S. Tariff Concerns

The decline in Canadian stocks was driven by weakness in mining and industrial shares, as uncertainty over U.S. tariffs overshadowed positive momentum from earlier in the week. Investors remain cautious after U.S. President Donald Trump’s latest comments suggested that planned tariffs, set to take effect in early April, might not be as severe as initially feared.

Canada, a major producer of steel and aluminum, has already been affected by higher U.S. tariffs on these metals, creating economic headwinds for the country’s export sector.

Investor Sentiment: Balancing Risk and Uncertainty

Despite the market volatility, some investors are taking a selective approach to risk. Joseph Abramson, co-chief investment officer at Northland Wealth Management, stated:

“We are selectively adding to risk assets. We particularly like U.S. banks, which could benefit from a domestic focus and U.S. financial deregulation, but we are more hesitant about jumping into Canadian stocks.”

Abramson further emphasized that Canada remains in a difficult position in a potential trade war with the U.S., given its weaker bargaining power.

Central Bank Influence & Sector Performance

The market also reacted to this week’s policy decisions from major central banks. On Wednesday, the Federal Reserve kept interest rates unchanged, but policymakers hinted at potential rate cuts later this year, which could impact global financial markets.

Among the affected sectors, the materials group, which includes metal mining stocks, fell 1% as gold prices pulled back from record highs. The dip in commodity prices weighed on Canadian mining shares, which are a significant part of the S&P/TSX index.

Outlook: Volatility Ahead?

With ongoing uncertainty over U.S. tariffs, investor caution remains high. While the TSX posted strong weekly gains, the market’s dependence on trade policy and commodity prices suggests further volatility could be ahead.

As global economic conditions evolve, traders and investors will closely watch developments in U.S.-Canada trade relations, Federal Reserve decisions, and commodity price trends to gauge the next market moves.