04:17 PM EDT, 10/29/2025 (MT Newswires) -- The Toronto Stock Exchange slumped Wednesday after the Bank of Canada as expected cut rates again and provided neutral forward guidance, but one market watcher was left feeling the overall tone from the central bank was "rather negative" on the economic outlook and another said it won't move firms from taking a "wait-and-see approach" when it comes to much needed investment spending.

The resources-heavy S&P/TSX Composite Index closed down 274.9, points or 0.9%, to 30,144,78. Most sectors were lower, with both Industrials and Info Tech down about 1.6% and Health Care down 1.2%. The Battery Metals Index rose 2.5% and Energy 1%.

The Bank of Canada met market expectations this morning as it cut rates by 25 basis points for a second straight month, taking the key benchmark level down to 2.25%. For his part, veteran economist David Rosenberg noted the forward guidance provided by the central bank in accompanying documents and in a market briefing on the decision was neutral, but he said the overall tone was more dovish than it was six weeks ago and "rather negative" on the economic outlook.

According to Rosenberg, the language conveyed that "more is coming". After all, he noted, the BoC forecast is for "stall-speed" real GDP growth of just 0.75% at an annual rate for the second half of this year, and with a "muddled outlook" for 2026. Rosenberg also noted reference to the "weakening macro backdrop transcending mere cyclical surfaces".

"From my lens," Rosenberg said, "the fact that the press conference contained a reference to any pickup being so tepid that it "implies excess supply is only taken up gradually," with the output gap remaining intact through 2027, is a telltale sign that the Bank is not yet done. And the beauty of this view is that there are only 40% odds being priced in for one more easing by January. Best to stay long the front end of the GoC bond curve and fade these intermittent rallies in the listless loonie."

Elsewhere, the Conference Board of Canada in citing key highlights from today said the BoC's October rate cut reflects the "growing realization that trade disruptions are not just cyclical, they're structural". The board noted sectors like autos, steel, and lumber have suffered sustained damage in 2025, which limits the effectiveness of monetary policy in stimulating demand. According to its latest Canada Five-Year Outlook, many firms are taking a wait-and-see approach when it comes to investment spending. Another quarter point cut to the BoC's key policy rate will not change this sentiment, the board added.

The board noted headline CPI inflation came in at 2.4% in September, slightly above expectations, while core inflation measures remain near 3%. However, the board said, broader indicators suggest underlying inflation is closer to 2.5% and trending downward. Despite this, it noted, the BoC expects inflation to stay near its 2% moving forward. It also noted that according to Statistics Canada, the distribution of price changes across CPI components shows a narrowing range, indicating reduced volatility and easing pressure.

"Canada's labour market remains fragile. With slower population growth, fewer new jobs are needed to maintain employment rates, but the underlying slack remains. The Bank's rate cut is a preemptive move to support demand and prevent further deterioration," the board added.

Meanwhile, RBC said overall its base case assumes no further rate reductions, as it expects a ramp up in fiscal stimulus, with more details to come in the federal budget next week, will do the bulk of the heavy lifting in the policy response to address tariff-related, concentrated economic weakness.

Of commodities, gold traded lower late afternoon on Wednesday for a fourth day, weakening despite an expected cut in U.S. interest rates. Gold for December delivery was last seen down US$26.20 to US$3,956.90 per ounce.

Also, West Texas Intermediate crude oil closed higher after a report showed a larger than expected drop in U.S. oil inventories, showing demand remains solid despite concerns the market is over supplied. WTI crude oil for December delivery closed up $0.33 to settle at US$60.48 per barrel, while December Brent oil was last seen up US$0.62 to US$64.99.