Canadian stocks declined steeply on Friday – extending yesterday’s losses – as markets analyzed the “surprising” jump in employment numbers released today, which dampened the expectations of another rate cut by the central bank.
After opening above yesterday’s close, the benchmark S&P/TSX Composite Index, quickly turned lower and saw further downside throughout the session before finally closing at 29,850.89, down by 419.09 points (or 1.38%).
Data released by Statistics Canada today revealed that Canada’s unemployment rate held steady at 7.1% in September, below market expectations of 7.2%.
Canadian employment rose by 60,400 jobs in September following the loss of 65,500 jobs in the prior month, well above market estimates of an increase of 5,000 jobs.
The sell-off on Bay Street also came as President Donald Trump threatened to massively increase tariffs on China in retaliation for China’s expansive export curbs on its rare earth minerals, which are essential for manufacturing and technology, triggering fresh concerns of a renewed U.S.-China trade war.
Canadian Prime Minister Mark Carney met Trump early this week in Washington. As Canada has been hit with 35% tariffs on its exports to the U.S., expectations were running high for a reduction in the rates or even some cancellation in levies. However, no significant breakthrough was announced after the meeting.
Canada-U.S. Trade Minister Dominic LeBlanc is still in Washington to meet with U.S. officials and monitor tariff talks.
Currently, the Canada-United States-Mexico Agreement allows a majority of Canadian exports to the U.S. to be exempted from tariffs. This tripartite free trade agreement is also up for renewal by mid-2026.
While consultations are ongoing between Canada and the U.S. on tariffs as well as the CUSMA, so far no details have been divulged for markets to cheer on either of the crucial issues.
However, Carney has stated that negotiations are ongoing on sector-specific deals with the U.S., which he stated would likely stay even with a revised USMCA.
In the U.S., the government shutdown entered day 10 today, with the closure stretching over to next week. Investors from all over the world, (including Canada) are cautiously watching the developments in the U.S. as concerns about spillover effects of this shutdown on global economy are rising.
Vital economic releases are delayed though the U.S. Bureau of Labor Statistics has announced that it will publish the September 2025 Consumer Price Index on Friday, October 24.
Markets are still pricing in a 25-basis-point rate cut in the upcoming October 28-29 Fed’s meeting.
In Canada, however, as the jobs numbers showed a surprise jump, investors are scaling back their expectations for a rate cut by Bank of Canada.
Major sectors that lost in today’s trading were Financials (1.27%), Energy (3.26%), Healthcare (3.90%), and IT (4.29%).
Among the individual stocks, Dye & Durham Ltd (8.57%), Shopify Inc (8.04%), Sylogist Ltd (7.74%), Curaleaf Holdings Inc (8.84%), and Baytex Energy Corp (8.91%) were the notable losers.
Major sectors that gained in today’s trading were Consumer Staples (1.08%), Communication Services (1.03%), and Utilities (0.86%).
Among the individual stocks, Loblaw CO (2.24%), George Weston Limited (1.74%), Metro Inc (1.26%), BCE Inc (1.76%), and Northland Power Inc (3.76%) were the prominent gainers.
Aritizia Inc (8.12%) and Perpetua Resources (7.47%) were among the prime market-moving stocks today.
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