-- The Toronto Stock Exchange closed lower Friday following a day-prior surge that recovered all of the losses made over the prior five sessions, as U.S. President Donald Trump said he will lift the tariffs charged on cars and trucks from the European Union next week to 25%, potentially adding more pressures on a global economy already struggling with the fallout from the Middle East war.
The S&P/TSX Composite Index closed down 73.15 points, or 0.2%, to 33,891.18, with sectors mixed. Energy was down by more than 1%, while the Battery Metals Index rose 2.3% and Info Tech was up near 2%
Still FactSet noted that going in to today the index was up 1,196.29 points or 3.65% in April, and up 2,251.57 points or 7.1% year-to-date.
In its Monthly Equity Monitor for May 2026 published today National Bank noted equities are "riding exceptionally strong earnings expectations", with global markets reaching new highs despite an ongoing oil shock and persistent geopolitical risk. "Markets appear to be pricing in a rapid return to normal, but the Strait of Hormuz disruption continues to support a meaningful commodity-price premium," the bank said.
National Bank remains cautious on risk assets, as renewed escalation could have severe global consequences, while even de-escalation may leave inflation and rates higher for longer. AI productivity gains offer upside over time, but they may not arrive quickly enough to fully offset the near-term drag from the commodity-price shock, weaker real income, and higher interest rates, the bank added.
Meanwhile, on the economics front, Trump's latest threat against the EU comes as The Canadian Press reported Canada's Prime Minister Mark Carney is rejecting the notion that his government might use energy or critical minerals as "leverage" in upcoming trade talks with the U.S. administration. Carney is cited in an interview as saying he wouldn't describe those sectors as "leverage" since Canada is not talking about stopping any sort of existing trade. His comments come after United States Trade Representative Jamieson Greer told an audience in Washington that Canada should not attempt to use its energy and mineral resources as leverage in discussions about renewing the continental free trade pact, the report notes.
Of commodities, gold edged higher by midafternoon Friday but remained rangebound, even as the dollar and treasury yields rose while traders turn to bonds and also while the Iran War pushes up oil prices and boosts inflation and threatens higher interest rates. Gold for June delivery was up US$12.80 to US$4,642.40 per ounce.
But West Texas Intermediate crude oil closed lower as Iran made a new peace proposal, that U.S. President Trump rejected. WTI crude oil for June delivery closed down US$3.13 to US$101.94 per barrel, while July Brent oil was down US$2.17 to US$108.23.