04:24 PM EST, 11/08/2024 (MT Newswires) -- The Toronto Stock Exchange closed with a loss on Friday, retreating from its day-prior record high on profit taking, lower commodity prices and longer term factors such as the prospect of a 'jumbo' rate cut here in December and uncertainty around how a Trump presidency in the United States will impact the Canadian economy

The S&P/TSX Commodity Index lost 86.53 points to close at 24,759.40. Base Metals, down 3.85%, and Energy, down 1.1%, were the biggest losers among sectors. The Battery Metals Index helped to limit losses, rising 5.7%.

West Texas intermediate crude oil closed 2.7% lower on Friday after fresh economic stimulus measures from China failed to impress as demand worries continue. WTI crude oil for December delivery closed down $1.98 to settle at US$70.38 per barrel, while January Brent crude for January delivery, the global benchmark, closed down US$1.76 to US$73.87.

Gold moved lower by late afternoon as the dollar rose while treasury yields were mixed. Gold for December delivery was last seen down $13.20 to US$2,692.60 per ounce. The price of the precious metal has remained below its Oct. 30 high of US$2,800.80 per ounce as traders took profits and the dollar rose following the re-election of Donald Trump to the U.S. presidency.

On the outlook for Canadian interest rates, David Doyle, head of economics at Macquarie, noted data Friday showed employment increased by 14,500 in October. Despite the weak gain, the unemployment rate was steady at 6.5%, as the participation rate declined, driven by softness in younger workers and those of core working age.

Noting a shifting Canadian immigration policy, Doyle said the gap between the trend in employment growth and the breakeven level (required to keep the employment rate constant) "remains substantial, suggestive of a widening output gap". For the Bank of Canada ahead, Macquarie expects another 50 basis point cut in December, followed by four successive cuts of 25 points per meeting, with the overnight rate reaching 2.25% in June 2025.

Meanwhile, Desjardins said "tariffs, threats (albeit shaky)" to dismantle the Inflation Reduction Act, signed by President Biden in 2022, with its incentives for renewable energy, electric vehicles batteries and deportations "all pose upside risks to market interest rates".

"In short," Desjardins said, "Trump 2.0 could spell significant upheaval for the Canadian economy. Aside from an unrealistic hope of diversifying away from the US export market, there's little in the way of economic policy advice to offer Canadian policymakers. The responsibility now falls to diplomats and lobbyists to leverage their networks and interpersonal skills to persuade the Trump administration to grant Canada preferential treatment and preserve the CUSMA [Canada-United States-Mexico Agreement]."

Desjardins added: "Unlike the current administration, Trump -- who appears poised to withdraw from the Paris Agreement again -- is unlikely to care much about Canada's critical minerals. It may help that Canada toed the line on tariffs against Chinese EVs and committed to up its defence spending. It may also help that the US auto sector is heavily located in red states and gives jobs to a significant number of Trump supporters. Still, the task is both monumental and delicate, with much at stake for Canada."