S&P/TSX composite up in Wednesday trading, U.S. stock markets also higher
Canada's main stock index moved nearly 100 points higher on Wednesday as strength in the financial sector helped offset weakness in basic materials and technology stocks, while U.S. markets also rose.
The S&P/TSX composite index was up 95.66 points at 35,416.20.
The reaction of the market was mostly “muted” after the Bank of Canada announced it was holding its key policy rate steady, said Kevin Burkett, portfolio manager at Victoria-based Burkett Asset Management.
The central bank’s benchmark interest rate remains at 2.25% after the sixth consecutive hold. Its decision, which was widely expected by economists, came as the economy still grapples with heightened uncertainty.
Bank of Canada governor Tiff Macklem said officials see the current rate as being at the right level to return inflation back to 2.0% and support an economic recovery, but that the bank's governing council is still ready to adjust its policy rate if needed.
“It's harder for (the Bank of Canada) to cut because that is going to show up in our currency,” said Burkett.
“There's enormous cross-border flows and what tends to happen is if you have your rate ... significantly different than the U.S., you tend to pay back in a weaker currency and now you're just importing inflation.”
He added the central bank is likely “waiting for clear evidence on inflation persistence” as uncertainty continues surrounding the United States’ war with Iran.
"What is Donald Trump doing in the Middle East? How does that situation evolve over the balance of the summer? I think that's the question that everyone is asking," Burkett said.
"It's in the category of unknowables."
Macklem emphasized Wednesday that much of the bank's outlook and policy stance hinges on the global energy market. If gas prices move up again and remain high for longer, a series of rate hikes are still on the table to guard against persistent inflation.
READ: ‘It’s insane’: Summer gas prices could hit record highs, upending budgets and travel
Meanwhile, new macroeconomic data out of the U.S. on the day suggested inflation south of the border was softer than expected.
The U.S. Department of Labor reported Wednesday that its producer price index — which captures inflation before it reaches consumers—dropped 0.3% from May to June.
Compared with a year earlier, it was up 5.5% in June, decelerating from a six% increase the month before. Excluding volatile food and energy prices, so-called core wholesale prices were up 4.7% from June 2025 and 0.2% from May.
That had a positive effect on stocks and bonds which are watching the geopolitical situation in the Middle East closely, said Burkett.
“Disruption on oil flows out of the Strait of Hormuz is very inflationary because it potentially sends oil prices higher,” he said.
“Softer-than-expected results … tempers any likelihood of (an interest rate) hike, and it's good for stocks because, of course, some of these inflationary pressures get absorbed into businesses' margins in terms of attempting to pass on as much of those costs to end consumers.”
In New York, the Dow Jones industrial average was up 150.37 points at 52,658.64. The S&P 500 index was up 28.81 points at 7,572.40, while the Nasdaq composite was up 162.22 points at 26,269.23.
The Canadian dollar traded for 71.18 cents US compared with 71.09 cents US on Tuesday.
The August crude oil contract was up 26 cents US at US$79.60 per barrel.
The August gold contract was down US$17.90 at US$4,051.80 an ounce.
