04:15 PM EST, 01/15/2025 (MT Newswires) -- The Toronto Stock Exchange closed with a second-straight gain on Wednesday as higher commodity prices topped concerns over a potential tariff war with the United States following Donald Trump's inauguration next week.

The S&P/TSX Composite Index closed up 200.72 points to 24,789.3, boosted by a rise incommodity prices. The biggest gainers were the Information Technology sector, up 2.01%, and Financials, up 1.22%.

Among commodities, West Texas Intermediate crude oil closed above US$80.00 on Wednesday for the first time since Aug.12 following a decline in U.S. inventories, sanctions on Russian exports, and amid competing demand forecasts from the International Energy Agency (IEA) and OPEC. WTI crude oil for February delivery closed up $2.54 to settle at US$80.04 per barrel, while March Brent crude closed up $2.11 to US$82.03.

Gold traded higher as the dollar and yields fell after a U.S. inflation measure rose more than expected last month. Gold for February delivery was last seen up US$37.50 to US$2,719.80 per ounce, the highest since Dec.11.

Despite today's gains, the prospect of a costly tariffs war with the United States, Canada's largest trading partner, remains top of mind for many. A 25% U.S. tariff on Canadian products, followed by potential Canadian retaliatory tariffs, would lead two-thirds (65%) of small businesses to increase prices for consumers to offset tariff impacts, the Canadian Federation of Independent Business (CFIB) warned. Additionally, the CFIB said 69% of small business owners said tariffs would lead to higher costs of doing business.

But Canada's resources minister has called for the country's politicians to temper talk of restricting the sale of commodities such as crude oil to the U.S. should President-elect Donald Trump follow through on his promise of slapping a 25% tariff on Canadian imports, according to a Dow Jones report. "I don't think threatening to cut off energy to the U.S. at the front end of this is a particularly productive thing to do," Jonathan Wilkinson, Canada's natural resources minister, is cited as saying in Washington, where he is meeting with U.S. legislators ahead of Trump's inauguration.

Meanwhile, following today's U.S. Consumer Price Index (CPI) data, Macquarie reiterated its baseline remains for just one further 25 bps cut from the Federal Reserve's policy committee, with the most likely timing being March or May. It said risks remain skewed to the later date. Macquarie noted headline CPI was firm in December at +0.4% month over month, boosted by strong food and energy prices. This has shown an accelerating trend since mid 2024. Core CPI, however, was softer at +0.23% month-over-month, the lowest reading since July.

For its part, Oxford Economics said the implications from the CPI data for its Fed forecast "isn't significant" even though risks toward its forecast for three 25bps rate cuts this year are still weighted toward fewer. "Our baseline forecast remains somewhat more dovish than market pricing because we are more optimistic than many that the underlying inflation trend will continue move toward the Fed's target."

Oxford Economics added it is hard to have strong convictions on the timing of cuts, where it believes the next occurs in March, because the labor market has improved and inflation will likely move lower early this year. "Rate cuts remain reasonable but ultimately the decision could be determined by if the Fed believes they're critical to manage the downside risks to the economy."

For BMO Economics, the bottom line for it after reading the latest Fed Beige Book released Wednesday afternoon is that there is nothing in it that will push the Fed off the sidelines at the January FOMC meeting.