Canada’s principal equity benchmark reversed course on Wednesday, surrendering ground after a record closing high as the nation’s large financial firms retreated and a high-profile gold transaction collapsed.
The S&P/TSX Composite Index finished the session down 415.92 points, or 1.2%, at 35,333.78. The move echoed losses across U.S. markets following the Federal Reserve’s decision to leave interest rates unchanged, and was compounded by declines in chip-related stocks tied to artificial intelligence themes.
Sector movers
Financials, which represent the largest weight on the TSX, dropped 2.9%, driven lower by Canada’s six biggest banks. Industrials slipped 1%, paced in part by Aecon Group Inc., which fell 9.1% on the day.
Mining was hit by a steep decline in Allied Gold Corp, which plunged 18.6% after confirming the termination of its planned C$5.5 billion sale to China’s Zijin Gold International Co Ltd. The companies said they concluded they were unlikely to meet closing conditions by the agreed deadline, prompting the deal’s collapse.
Energy stood out as the only major sector to finish higher, rising 3.2% as crude futures rallied. Cenovus Energy Inc. gained 4.5% after the company raised its 2026 production outlook following a second-quarter profit that more than tripled year-on-year.
Market context and drivers
Investor caution extended from an ongoing semiconductor sell-off and positioning around upcoming central bank guidance. Earlier in the session, Asian technology shares tumbled after South Korea’s SK Hynix reported a profit shortfall, stoking concerns over lofty AI-related valuations ahead of key quarterly results from major U.S. technology companies.
On monetary policy, the Federal Open Market Committee opted to keep the federal funds rate at 3.50%-3.75%. The Fed’s deliberations remain complicated by geopolitical tensions in the Middle East and the resulting volatility in oil markets since its previous policy meeting in mid-June, when elevated crude benchmarks led some FOMC members to expect further hikes this year.
U.S. crude oil settled 6.6% higher at $84.46 a barrel after renewed airstrikes in the Middle East raised supply concerns, and government data showed U.S. crude inventories had fallen to a multi-year low. That supply sensitivity helped underpin the gains in Canada’s energy sector.
Domestic developments and outlook
Market participants on Bay Street are also parsing a heavy schedule of domestic corporate earnings, as Canadian firms continue to report results alongside important macroeconomic releases expected later in the week.
Separately, Prime Minister Mark Carney sought to downplay speculation that Canada might restrict oil supplies to the United States as leverage in a trade dispute, warning that such action would harm Canada’s standing.
Overall, the trading day reflected a divergence between commodity-sensitive sectors, which benefitted from higher oil prices, and financial and technology-linked names that faced selling pressure amid broader risk-off flows.
Reporting contributions: Pranav Kashyap.