Canada's stock market showed positive momentum on Monday, April 14, 2025, as futures climbed following the U.S. government's decision to exclude key imports from China from tariffs. The S&P/TSX index futures rose by 0.8% on Monday morning, bolstered by optimism surrounding the trade landscape.
This boost comes after the White House announced tariff exemptions on Friday, April 11, covering 20 categories, including smartphones and laptops, which account for approximately 23% of U.S. imports from China. The exemption is seen as a significant relief for manufacturers who have faced increased costs due to trade tensions.
U.S. President Donald Trump indicated that while the exemption was a positive step, he would announce semiconductor tariffs within the next week, leaving some uncertainty in the market. “I think anytime we get some positive news on tariffs, markets seem to be rallying and anytime we get a little bit of negative news on tariffs, they seem to be selling off,” said Josh Sheluk, portfolio manager at Verecan Capital Management.
The Toronto Stock Exchange’s S&P/TSX Composite Index reflected this optimism, gaining 93.63 points, or 0.40%, reaching 23,681.43 at 12:13 p.m. ET. The rise was broad-based, with the rate-sensitive real estate sector leading the charge with a 1.3% increase.
Oil prices also saw a rise of 1% as China's crude imports increased in March, further contributing to the positive sentiment in the market. The potential pause in the Bank of Canada's interest rate adjustments, with a 58% chance of halting rate cuts, suggests a cautious optimism among investors regarding inflation and trade tensions.
As global markets reacted positively to the easing of trade tensions, stocks were rising across the board. The S&P 500 index was up 0.5% in midday trading, while the Dow Jones Industrial Average gained 154 points, or 0.4%. Major technology companies like Apple and Dell benefited from the tariff exemptions, with Apple climbing 2.1% and Dell Technologies rising 3.4%.
However, the relief may be short-lived. Analysts warn that the temporary nature of the tariff exemptions could keep uncertainty high for companies trying to plan for the future amid fluctuating trade policies. The chaotic nature of Trump's tariff rollout has led to significant market volatility, as evidenced by a recent 9% dip in Canadian markets from January highs.
In the bond market, Canadian government bond yields fell across the curve on Monday, with the 10-year note last recorded at 3.176%, tracking its U.S. counterparts lower. This drop in yields indicates a shift in investor sentiment, as the market appears to be responding to the easing of trade tensions and the potential for a pause in rate cuts.
Looking ahead, this week’s economic calendar is packed with key data, including Tuesday’s domestic consumer inflation report and Wednesday’s Bank of Canada interest rate decision. The central bank is expected to pause its rate-cutting cycle, as increasing inflation and deteriorating employment figures diminish the need for immediate economic stimulus.
Globally, the positive sentiment from the U.S. tariffs exemption has also been felt in other countries. Stock indexes rose 2.3% in France, 2.6% in Germany, 1.2% in Japan, and 1% in South Korea. This widespread increase reflects a collective sigh of relief from investors who have been grappling with the implications of ongoing trade disputes.
China also welcomed the U.S. decision, describing it as a small step towards resolving trade tensions. The Chinese commerce ministry called for the complete cancellation of remaining tariffs, emphasizing the need for a stable trading environment. Chinese leader Xi Jinping, during a diplomatic tour of Southeast Asia, remarked that no one wins in a trade war, positioning China as a stabilizing force amid Trump's erratic tariff policies.
Despite the positive developments, the market remains on edge. Investors are keenly aware that the current relief could be fleeting, especially with Trump’s administration signaling that more tariff announcements are forthcoming. The uncertainty surrounding these potential tariffs continues to loom over the market, as companies and investors alike attempt to navigate the ever-changing landscape.
In conclusion, while the recent tariff exemptions have injected a dose of optimism into the markets, the ongoing volatility and uncertainty surrounding future trade policies suggest that investors should remain cautious. As the week unfolds, all eyes will be on the upcoming inflation report and the Bank of Canada’s decision, which could further shape the market's trajectory in the months to come.
