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TSX Closer: Index Edges Lower as Base Metals And Industrial Stocks Fall

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The S&P/TSX Composite Index closed lower for the second straight session on Monday as declines in base metals and industrial stocks outweighed gains in energy.

Investors weighed renewed US-Iran tensions and concerns around higher US tariffs on the Canadian economy.

The index closed down 283.44 points, or 0.8%, at 36,270.48. Base Metals led decliners, down 1.7%. Industrials and Information Technology were down 1.3% each. Energy rose 1.4%.

In commodities, West Texas Intermediate (WTI) and Brent crude jumped as renewed hostilities between the US and Iran heightened concerns over potential disruptions to oil supplies from the Middle East. The latest exchange of strikes brought fresh attention to shipping risks around the Strait of Hormuz and supported oil prices.

October WTI crude oil contract settled up $2.36, or 2.8%, at $85.76 per barrel, while October Brent oil was last seen up $2.28, or 2.6%, at $90.38 per barrel.

Meanwhile, December Comex gold futures shed 0.8%, or $33.50, to $4,496.40 per ounce at last look.

In currencies, the US dollar edged lower 0.3% against the Canadian dollar to 1.3858 at last look.

Meanwhile, on the economic front, Canada's economic recovery was expected to lose momentum but remain on track as higher US tariffs weigh on growth, according to KPMG Canada.

A permanent increase in the US tariff rate to 7% could lower Canada's gross domestic product by 0.3 to 0.5 percentage points next year, slowing 2027 growth to 1.5% to 1.7% from around 2%, KPMG Canada said in a note.

The latest US tariffs are expected to have a modest impact on the Canadian labor market, reducing employment by 5,000 to 15,000 jobs, it added.

Looking ahead, Canada's July trade data that is due Thursday is expected to show a temporary boost to exports from front-loading ahead of new US tariffs, according to RBC Economics. The tariffs, announced July 20 and effective Aug. 22, likely prompted US importers to increase purchases of Canadian goods before they took effect.

RBC expects Canada's trade surplus to widen to C$4.2 billion in July from C$3.9 billion in June, with exports forecast to edge up 0.1% on stronger vehicle shipments and imports to decline 0.3%.

However, Canada should keep the door open to renewed trade talks with the US despite the latest negotiating setback, as an escalating trade war would pose increasing challenges for the Canadian economy, according to CIBC Economics.

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