04:21 PM EST, 02/05/2025 (MT Newswires) -- The Toronto Stock Exchange closed with a gain on Wednesday, rising for a second session as investors went bargain hunting following Jan.30's record high as tariff worries fade after Donald Trump on Monday said he would delay implementing a 25% tariff on most imports from Canada and a 10% level on energy for 30 days.

The S&P/TSX Composite Index closed up 290.49 points to end at 25,569.84. The biggest gaining sectors were Battery Metals, up 4.24%, Healthcare, up 2.21%, and Technology, up 2.91%.

On sectors, Gabriel Dechaine, an analyst at National Bank, looked at Canadian banks. In summary, Dechaine said the current trade dispute between Canada and the United States is "clearly a short-term negative" for them. However, he added, the long-term outlook is improving, assuming Canada's policymakers adapt to the changing landscape in a rational manner.

"Early indications are positive, for the most part," he said, noting British Columbia is fast tracking 18 resource projects in order to diversify its export markets. "Initiatives like these could unleash billions of pent-up capital expenditure spending, which bodes well for the Canadian economy and the banks that operate in it," Dechaine added.

The analyst said a welcome reversal in credit demand could be taking place, as the Canadian banks and the Canadian energy sector have been "consciously uncoupling" over the past decade. Excluding a spike during the pandemic, he noted, direct loans to the energy sector have been consistently declining, hitting a low of 0.8% of total bank loans by the end of fiscal 2024, or about half of the pre-pandemic "normalized" level.

Dechaine said if investment in Canada's resource sector is revived in order to create more resiliency for the economy, then the banks would certainly be there to assist.

He added: "Merely getting back to normal levels of lending to this sector would mean over $30 billion of credit capacity from the Canadian banks. And this figure understates the growth potential to the extent that other resource (and support) sectors could be on the upswing, consumer credit demand could rise in line with job creation in these sectors and capital markets activities could increase alongside these trends."

Of interest given a potential trade war between Canada and the United States, Canada's international merchandise trade balance today went from a deficit of $986 million in November to a surplus of $708 million in December, the first surplus since February 2024. Desjardins said such a trade surplus in December points to annualized real GDP growth in Q4 2024 of 2.0%, slightly above the Bank of Canada's 1.8% estimate in its January Monetary Policy Report.

"But," Desjardins said, "today's trade release is the calm before the gathering storm of potential U.S. import tariffs in 2025. Looking ahead, we expect the lingering threat of U.S. tariffs to increase volatility in both exports and imports, likely weighing heavily on growth and the minds of Canadian central bankers."