04:33 PM EDT, 06/20/2025 (MT Newswires) -- The Toronto Stock Exchange closed with a second-straight small losses on Friday, weighed by concerns around a possible global trade war and Middle East tensions, and likely some profit taking after the index recently hit a record high.
The S&P/TSX Composite Index closed down 8.43 points to 26,497.57, staying near the June 12 record of 26,615.75. Base Metals was the biggest loser among sectors, down near 1.5%. The Battery Metals Index was down 1.3%, as most sectors closed . No sector rose near 1%.
Rosenberg Research in a note published today looked at how the TSX did become one of the first to hit a new record and it noted that gold exposure helped. Rosenberg Research's Alp Erdogan and David Rosenberg on Friday looked at the reasons noted the TSX's recent strength and the duo broke down the structural factors that helped the index bounce back "so strongly" from the April lows that followed President Trump's imposition of global tariffs.
The pair remembered back to April 8, six days after Trump's 'Liberation Day' speech at the White House Rose Garden, when the TSX Composite closed at 22,506.90, an eight-month low. From that trough, they said, it took the market only 17 trading days to wipe out the losses and go back to its pre-April 2 closing level. They added: "What was more striking was the fact that this sharp bounce back unfolded against an unfavorable backdrop of murky macroeconomic fundamentals, tariff-induced uncertainty, and depressed oil prices."
Despite a "flurry of twists and turns in the constantly evolving tariff saga", Erdogan and Rosenberg said "a period of relative calm has ensued" after the chaos of tariff announcements and the early April market sell off, triggered by tariff fears. As the third-largest trading partner of the United States, Canada has "fared relatively well" after being excluded from the Liberation Day tariffs and having USMCA-compliant products excluded from the 25% 'fentanyl' tariffs, they added.
Erdogan and Rosenberg cited CIBC Capital Markets when noting mining has accounted for approximately 40% of Canadian new issuances on a year to date basis. Consequently, this strong price performance from the precious metals sector, comprising near 11% of the Composite Index, has "resulted in underweight generalist funds adding exposure", they said.
"Additionally," the duo said, "ongoing gold purchases by central banks and governments have continued to support gold prices and mining shares. According to Goldman Sachs, global central banks are buying 80 metric tons of gold monthly, and sovereign wealth funds are collectively acquiring 1,000 tons annually -- about a quarter of yearly global production. We remind clients that these strategic market players are long-term investors who happen to be price-indiscriminate."
For Rosenberg Research the bottom line is that "all-in, a confluence of fundamental factors" pushed the S&P/TSX Index to become one of the first global benchmarks to get back to its pre-Liberation Day levels. Thus, it said, the Canadian benchmark has "benefitted from sectoral composition and a cyclical/value bent, an economically nationalistic trend that buoyed domestic retail, and a newly elected government with a pro-growth fiscal playbook". It noted global markets have added a new term to the investing lexicon: The Great White Long trade.
Canada's market, the research noted, has unique characteristics compared to the United States in that it generates far greater dividend and earnings yields. It said "the relative valuations in the Canadian stock market remain compelling: you get paid to take on equity risk when you compare the TSX to alternatives in cash and bonds". The same, they added, cannot be said for U.S. markets.
Rosenberg Research said its Strategizer model's score card, at 39.8 for Canada, still compares favorably to the latest 28.4 grade in the U.S. It added: "This gap (which is in the process of closing) may also have acted as a magnet for foreign flows into North America seeking a home that has decent value, exposure to gold, and generates superior yields. Going forward, our in-house research strongly recommends continued exposure to the basic Materials, Financials, and Industrial sectors."
Meanwhile, Rosenberg Research in a separate note on the economy said Canadian retail prices "continue on a disinflationary path". It noted today's Canadian retail sales failed to meet expectations as the most cyclically sensitive sectors of the economy declined.
Canadian retail sales, the research noted, rose by 0.3% month over month in April, "a tad below" the consensus for a rise 0.4% MoM. But just as was the case in March, much of that gain came from a sizable increase in motor vehicle sales , up 1.9% MoM, while retail sales excluding autos actually fell 0.3% on the month, coming in slightly below market expectations of 0.2% drop, the research said, before adding: "What was truly ominous was Statistics Canada's flash estimate for May, which is showing a hefty 1.1% MoM drop."
Perhaps, Rosenberg Research said, the "most key element" of the report was the deflation seen in the retail sales price index, coming down 0.2% MoM from the previous month. Thus, volume sales rose by 0.5% MoM. Since the 2.4% YoY rise nearby January peak, the price deflator has now receded in each of the past three months and is risng at a "lame and tame" 1.6% annual pace, it noted.
According to Rosenberg, the "real build-in" for Q2 retail sales is now running at a rise of1.5%. But it said that's a pace it would expect to continue slowing throughout the quarter as labor market conditions continue to weaken and households keep pulling back on large spending in preparation for the unknowns. "The inflationary pulse from tariffs are not all showing up in the data yet, but this rapid pace of disinflation should provide the Bank of Canada the confidence to make the pre-emptive cuts the economy needs," it added.
Of commodities, West Texas Intermediate closed with a loss on Friday with traders lowering the commodity's risk premium as Iran and Israel continue to trade attacks and concerns ease that the U.S. will enter the fighting. In its last day as the active contract, WTI crude oil for July delivery fell $0.21 to expire at US$74.93 per barrel, while August Brent crude was last seen down $1.94 to US$76.91.
Gold traded lower as traders returned to work following the Juneteenth holiday to weigh the Federal Reserve's Wednesday decision to leave interest rates unchanged amid concerns tariffs imposed by President Donald Trump will raise inflation. Gold for August delivery was last seen down $26.00 from Wednesday's close to US$3,382.10 per ounce.