04:22 PM EST, 01/16/2026 (MT Newswires) -- The Toronto Stock Exchange set its seventh record close of 2026 on Friday, even though gains were modest amid mixed commodity prices and as investors mull "unintended consequences" in a deal with China on electric vehicles while they also await the release of key inflation data next early week.

The S&P/TSX Composite Index closed up a modest 11.63 points to 33,040.55, with sectors mixed too, none of them rising by as much as 1%, while each of Base Metals, Health Care and Information Technology were down by more than 1%.

On the economics front, Canada had reached a deal with Beijing to slash tariffs on a set number of Chinese EVs in exchange for China dropping duties on agricultural products. Reports said the deal marks a de-escalation in tensions with a country the Liberal government had, in recent years, branded as a disruptive power, and is getting mixed reactions in Canada.

Ontario Premier Doug Ford and some auto industry groups are slamming the agreement as a threat to the country's auto industry, but Saskatchewan Premier Scott Moe, who was in Beijing with Carney, was thrilled to see a deal he said will allow his province's canola exports to China to return to normal levels, the Canadian Press reported.

BMO Capital Markets Chief Economist Douglas Porter in his regular Friday 'Talking Points' note cited "unintended consequences" stemming from Canada's "limited" deal with China to allow 49,000 EVs, or 2.5% of the domestic auto market, at a low tariff in exchange for lower 15% tariffs on canola sales. A deal, he noted, that can be viewed as a direct result of the ongoing trade spat with the United States. Just this week, Porter noted, President Trump again claimed in Detroit the United States did not need anything from Canada and that the USMCA was "irrelevant". This, Porter said, cast "some serious shade" on the upcoming review of the agreement, while "pounding home the need to strengthen ties elsewhere, with anyone". Of course, Porter noted, Canadian Prime Minister Carney is now facing some unintended consequences, as the U.S. Trade Representative promptly called the EV imports deal as "problematic", while Ontario Premier Ford decried the "lopsided" deal.

Meanwhile, Avery Shenfeld, chief economist at CIBC Capital Markets, in his 'Week Ahead' market call, said a 0.4% drop on Monday in the CPI for December, in line with consensus, would represent a trend-like 0.2% rise in seasonally adjusted terms, and leave the 12-month rate at 2.2%. He added that is "quite favourable" given that there's an upward bias in the 12-month figure because the prior December benefited from a short-lived sales-tax holiday on items like restaurant meals. Shenfeld noted Monday's core inflation readings will remain a bit further above the 2% target, he sees in line with consensus growth of 2.7% year over year in both core-median and trim, but CIBC expects relief in the months ahead from the rent component, alongside the impacts of economic slack.

Of commodities, gold futures had weakened for a second day by midafternoon Friday on easing international tensions, and while traders take profits following Wednesday record high. Gold for February delivery was last seen down $25.50 to US$4,598.20 per ounce, staying below the Jan. 14 record high of US$4,635.70 per ounce.

But West Texas Intermediate crude oil closed higher despite abundant supply as geopolitical tensions continue even as the U.S. ended threats to strike at Iran. WTI crude oil for February delivery closed up $0.25 to settle at US$59.44 per barrel, while March Brent oil was last seen up $0.49 to US$64.25.