04:36 PM EST, 12/17/2024 (MT Newswires) -- The Toronto Stock Exchange closed lower for a fourth-straight session on Tuesday on lower commodities and political uncertainties after the governing Liberals were yesterday forced to re-shuffle their cabinet after the surprise resignation of Finance Minister Chrystia Freeland just as the threat of a tariffs war with the United States looms.

The S&P/TSX Composite Index closed down 27.5 points to 25,119.71. The declining sector were led by Battery Metals, down 1.81%, and Telecoms, down 1.41%. Information Technology and Health Care were the biggest gainers, up 0.87% and 1.47%, respectively.

Among stocks, Air Canada ( ACDVF ) closed down 9.4% after hosting its Investor Day in Toronto where the company reiterated its 2024 guidance and introduced guidance for 2025 while also providing long-term financial targets that disappointed some investors.

Still, National Bank maintained its outperform rating and $27.00 target on the airline following the presentations. National said Air Canada ( ACDVF ) will face some cost headwinds in 2025 (largely already factored into the bank's forecast), but it sees a realistic path to margin expansion and EBITDA growth through the 2028 timeframe with upside beyond. With the stock trading at just 3.2x 2025 EV/EBITDA versus its historical average of 4.4x and the U.S. peers at 5.7x, valuation remains compelling, the bank added.

As well, Dye & Durham ( DYNDF ) closed down 7.1% as it appointed Hans Gieskes as its board chair and interim chief executive. In addition, it said director Arnaud Ajdler will serve as the board's lead independent director until the company recruits a permanent CEO.

This comes after DND previous board resigned after management lost a proxy battle and the company appointed the successful nominees of activist shareholder Engine Capital, including Ajdler, to its new board, effective immediately.

Still, losses were relatively modest on the TSX today, with the index down 500 points over the three prior sessions, with some seeing political uncertainty in Canada as a potential opportunity, not least in terms of the Canadian dollar.

Thierry Wizman, Global FX & Rates Strategist at Macquarie, said although traders may be adding to strategic long positions in USD-CAD on political turmoil in Canada, he would not do so if it starts to look like a Conservative-led government will emerge if an early election is called. According to Wizman, a new Conservative government would be 'pro-growth' and aligned with a Trump-led administration, perhaps even helping Canada to escape import tariffs.

"Getting a Conservative-led government might be what puts the 'top' in for USD/CAD much sooner than when we would otherwise expect," Wizman added.

Meanwhile, another Macquarie economist said further disinflation lies ahead despite the "mixed signals" in Canada's November inflation data. David Doyle, head of economics at Macquarie, noted the average of trim/median was +0.31% monthly, the second consecutive firm reading. Annualized, the average firmed to +2.65%. These figures, however, were boosted by a strong impulse from gasoline and several food categories.

Doyle also noted traditional core, excluding food and energy, was more subdued at +0.1% monthly and +1.9% annualized. This, he said, will be the last "clean" reading for CPI for the next four months as the GST/HST temporary tax relief from the federal government will impact data for December through March.

Overall, in the first half of 2025, Macquarie suspects inflation data to be subdued in Canada given the size of the output gap and the deflationary impact that the immigration U-turn will have on shelter costs. Macquarie continues to anticipate four consecutive 25 basis point cuts from the Bank of Canada in the first half of 2025 with the policy rate falling to 2.25%.

Also limiting moves today, David Rosenberg noted there was "something for everyone" in Canada's CPI data for November, and hence the muted reaction in both the foreign exchange and bond markets. He noted the headline came in flat (not seasonally-adjusted) versus the +0.1% consensus expectation and showed how the 0.4% bump in October was an aberration.

The annual trend in the headline eased to a rise 1.9% from 2.0% in October.

Rosenberg also noted the annual trend in the core median metric stayed at +2.6% versus a consensus estimate of 2.4%, and the core trimmed measure was stuck at +2.7% (also coming in a tad above the +2.6% consensus view). Both were up an outsized +0.3% on a MoM basis.

But, he said, these seem to fly in the face of the most important inflation barometer, which is the CPIX, which excludes the eight "noisiest and most volatile components" in the CPI. It rang in light at 0.1% sequentially. And the annualized pace eased to .5% from 1.6% in October and "light years away" from the +2.8% trend a year ago, he added.

WTI crude for January delivery closed down US$0.63 to settle at US$70.08 per barrel, while February Brent crude was last seen down US$0.78 to US$73.13.

Gold prices weakened for a fourth-straight session late afternoon on Tuesday as the dollar steadied ahead of Wednesday's interest-rate decision from the Federal Reserve's policy committee while November U.S. retail sales were better than expected. The metal was last seen down US$8.80 to US$2,661.20 per ounce.