04:15 PM EDT, 03/13/2025 (MT Newswires) -- The Toronto Stock Exchange sank on Thursday as investors seem to doubt a meeting of Canadian and U.S. government officials set to begin shortly in Washington will turn down the temperature around a brewing trade war and sovereignty threats from Donald Trump.

The S&P/TSX Composite Index closed down 220.11 points to 24,203.23. Among sectors, Information Technology (-3.23%), posted the biggest loss. Base Metals, up 2.11%, is the sole gainer.

Staying on sectors, Marius Jongstra, vice-president, market strategy at Rosenberg Research published a note where he noted markets have started to price in odds of a recession, and recommends tactically increasing defensive exposure in response.

"Market implied recession odds are on the rise as tariff-induced uncertainty bumps up against waning economic activity. The implication for investors, as GDP estimates get ratcheted lower, is to reduce overall portfolio risk until more clarity emerges on the path ahead. We recommend tactically increasing defensive sector exposure in the equity portfolio, while simultaneously overweighting fixed income relative to stocks. Interestingly, those with a higher risk tolerance can start to chip away at commodities (oil), looking through near-term volatility, which have discounted a higher risk of recession compared to financial assets," he wrote in a executive summary.

This comes as U.S. President Donald Trump upped the stakes in his global trade war by again threatening the economy and sovereignty of Canada, threatening excise taxes on European wines and alcohol and talking about annexing in Greenland.

Amid signs of a widening trade dispute, the World Trade Organization confirmed Thursday that Canada has requested dispute consultations with the United States over the imposition of U.S. import duties on steel and aluminum products from Canada. The request was circulated to WTO members on March 13, a statement said. It noted Canada claims the measures, which terminate Canada's exemption from additional duties on certain steel and aluminum products and increase duties on aluminum articles, which took effect on March 12, are inconsistent with U.S. obligations under the General Agreement on Tariffs and Trade (GATT) 1994.

Fortunately, perhaps, National Bank notes that "though clearly important," equities "aren't be-all and end-all for Canadians," based on Canadian household exposure to equity markets in Statistics Canada's quarterly national balance sheet accounts data released today.

"Seemingly taking a cue from their American cousins, Canadian households now possess unprecedented equity exposure too. At C$5.16 trillion, the market value of equity and investment fund shares comprised 47% of Canada's total household financial assets at the end of 2024. Clearly then, a serious/sustained loss of traction in equities could handicap a Canadian household sector increasingly worried about job prospects and still contending with cost-of-living pressures. Relatively speaking, however, equity portfolios aren't the be all and end all in Canada. For the average household north of the border, more wealth continues to be tied up in real estate/housing," National Bank wrote.

True, National Bank said, real estate's share of total Canadian household assets is off its peak. But at roughly 40%, housing remains more important to the average household in Canada than in the United States.

"Notwithstanding the concentration of assets/wealth at higher-income levels, non-financial assets (primarily real estate) account for a more meaningful share of assets for the lower-income Canadians we remain most concerned about.... All this makes the recent bout of housing market paralysis worrisome. While an imperfect tool for a trade war, looser monetary policy may well be needed to reinvigorate this interest rate-sensitive and undeniably important asset class in Canada," National Bank added.

Of commodities today, West Texas Intermediate crude oil closed down as the International Energy Agency said it expects higher global demand this year to be accompanied by rising inventories, while cautioning its outlook is clouded by U.S. trade wars. WTI oil for April delivery closed down $1.13 to settle at US$66.55 per barrel, while May Brent crude was last seen down $1.13 to US$69.82.

But gold traded at a record high late afternoon on Thursday even as the dollar rose after another report showed U.S. inflation cooled last month, while safe-haven buying continues as U.S stock markets tumble again amid Donald Trump's tariff threats. Gold for April delivery was last seen up $49.90 to US$2,996.70 per ounce, topping the Feb.24 record close of US$2,963.20.