04:18 PM EST, 02/11/2025 (MT Newswires) -- The Toronto Stock Exchange posted a modest loss on Tuesday, rising off session lows on signs the interest rate differential between Canada and the United States may not become as wide as some were fearing of late given the healthier appearance of the U.S. economy.

The S&P/TSX Composite Index closed down 27.03 points to 25,631.83 points, after earlier touching 25,508.72. Of sectors, Base Metals, down2.34%, and Health Care, down 1.13%, were the biggest decliners. Limiting losses were gains in Energy, up 1.33%, and Telecoms, up 0.69%.

Veteran market watcher David Rosenberg said the tone from Fed Chair Jay Powell in prepared comments for his semi-annual Congressional testimony today "lined up on the dovish side overall." Rosenberg noted there was "nothing in there about the remote possibility of having to raise rates," a prospect that has been bandied about in some corners of Wall Street. That, at a time when the Bank of Canada is definitely on the rates lower path.

According to Rosenberg, Powell framed what the Fed will do, not once, but twice in terms of "reducing policy restraint", even while acknowledging that policy is "significantly less restrictive" than it was last summer. "He made it very clear that he is happy keeping rates where they are indefinitely at a time when he surely knows that the futures market does not have the next full rate cut occurring until September ("We do not need to be in a hurry to adjust our policy stance"). That is bound to change, and in our view, the Fed will be easing again sooner and harder than is currently being discounted."

There may also be reason for Canadians to not fear U.S. tariffs as much as they do, according to RBC. RBC Economics noted today that just a week after the threat of blanket 25% tariffs on imports from Canada were avoided, the Trump administration announced 25% tariffs on U.S. imports of steel and aluminum products from key trade partners including Canada, coming into effect on March 12.

RBC noted that unlike the threat of broad-based tariffs on all imports, there is recent historical precedence for U.S. tariffs on steel and aluminum products. Indeed, it said, the latest tariff threat is a direct extension of Section 232 of the Trade Expansion Act used to implement steel and aluminum tariffs in 2018-19, but aluminum tariffs have been bumped up from 10% to 25%.

As in 2018-19, RBC said, the measures "will be challenging" for steel and aluminum producers, and will increase costs across the industries that buy those products, particularly in the North American manufacturing sector. "But," the bank added, "if that experience is any guide, much of the cost will be paid by U.S. purchasers of tariffed products, limiting the negative impact on U.S. trade partners, including Canada."

Among commodities, gold edged down from a record high late afternoon, while treasury yields rose, as Powell began his two days of testimony to Congress and also as the Trump Administration readied its tariffs plan on steel and aluminum imports, spurring safe haven . Gold for April delivery was last seen down $8.20 to US$2,926.20 per ounce, falling off Monday's record close of $2,934.40.

West Texas Intermediate (WTI) crude oil closed higher for a third-straight session on supply concerns, while the Trump Administration's new tariffs could affect the energy sector. West Texas Intermediate crude oil for March delivery closed up $1.00 to settle at US$73.32 per barrel, while April Brent crude was last seen up $1.05 to US$76.92.