TSX Futures Rebound After Market Sell-Off Amid Tariff Uncertainty

TSX Futures Rebound as Investors Weigh Trump’s Tariff Impact & Bank of Canada Decision

Canada’s main stock index futures edged higher on Tuesday as investors evaluated the economic fallout from U.S. President Donald Trump’s tariffs on Canada and anticipated a crucial central bank decision later this week.

TSX Futures Show Signs of Recovery

By 06:39 ET (10:39 GMT), the S&P/TSX 60 index futures had climbed by 7 points, or 0.5%, indicating a possible market rebound after Monday’s sharp sell-off.

On Monday, the Toronto Stock Exchange’s S&P/TSX composite index plummeted by 378 points, or 1.5%, marking its lowest close since November 4—just one day before Trump’s election.

Wall Street Volatility Amid Tariff Concerns

U.S. markets suffered steeper losses, with traders expressing concerns that Trump’s unpredictable tariff policies could undermine consumer spending, elevate inflation expectations, and slow economic growth. In a weekend interview with Fox News, Trump acknowledged that his tariffs on Canada, Mexico, and China could contribute to a recession.

Political Shifts in Canada Add to Market Uncertainty

Markets also reacted to political developments in Canada, where former central banker Mark Carney secured leadership of the ruling Liberal Party, replacing Justin Trudeau as Prime Minister. Carney promised a “seamless” transition but refrained from discussing any potential talks with Trump.

Bank of Canada Expected to Cut Interest Rates

The Bank of Canada is widely expected to lower interest rates by 25 basis points on Wednesday in an effort to cushion the economy from the potential fallout of U.S. trade restrictions.

U.S. Stock Futures Show Modest Gains

U.S. stock futures inched higher after Wall Street’s sharp declines fueled by recession fears.

By 07:03 ET:

S&P 500 futures rose 14 points (0.3%)
Nasdaq 100 futures climbed 72 points (0.4%)
Dow futures gained 109 points (0.3%)

The S&P 500 tumbled 2.7% on Monday, marking its worst session in weeks, while the Nasdaq 100 endured its steepest drop since 2022. The Dow Jones Industrial Average slid 2.1%.

Economic Concerns & Government Uncertainty Weigh on Sentiment

Investor sentiment remained fragile due to ongoing uncertainty surrounding Trump’s mass federal layoffs and Washington’s ongoing negotiations to prevent a government shutdown. House Republicans are set to vote Tuesday on a spending bill backed by Trump.

Treasury yields declined as nervous investors sought safe-haven assets, while the U.S. dollar index rose slightly. Meanwhile, the CBOE Volatility Index (VIX), often called the “fear index,” spiked to its highest level since August 2024.

Oil Prices Edge Higher on Weaker Dollar

Oil prices rebounded slightly after earlier losses, supported by a weaker U.S. dollar. However, persistent fears of an economic slowdown and escalating trade tensions capped gains.

Crude prices had suffered steep losses over the past three weeks as uncertainty over Trump’s shifting tariff policies fueled market anxiety. His recent imposition of a 20% tariff on China—the world’s largest oil importer—further pressured prices, as Beijing retaliated with its own countermeasures.

By 07:06 ET:

Brent crude futures (May delivery) rose 1.1% to $70.03 per barrel
West Texas Intermediate (WTI) crude futures climbed 1.1% to $66.40 per barrel

Gold Prices Surge Amid Recession Fears

Gold prices advanced in European trading as the U.S. dollar hovered near a four-month low, with investors bracing for a potential U.S. recession.

Markets are closely watching U.S. Consumer Price Index (CPI) data set for release on Wednesday. The inflation report could influence the Federal Reserve’s monetary policy decision next week, with expectations that the central bank will keep interest rates steady while assessing the impact of Trump’s trade tariffs.

By 07:07 ET:

Spot gold rose 0.8% to $2,911.91 per ounce
Gold futures (April contract) gained 0.6% to $2,916.89 per ounce

Final Thoughts

Investors remain on edge as uncertainty over Trump’s trade policies, Canada’s shifting political landscape, and central bank decisions continue to shape market movements. With crucial economic data and policy decisions looming, volatility is expected to persist in the days ahead.

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