Canadian stocks continued to slide for a second straight session on Wednesday as the U.S. Federal Reserve raised its benchmark interest rate by 25 basis points and signalled that its inflation fight remains far from over. This factor, coupled with falling commodity prices, drove the S&P/TSX Composite Index down by 91 points, or 0.3%, to 35,491, taking the benchmark to its lowest level in more than a month.
Although consumer cyclical, consumer staples, and utility stocks saw renewed buying largely amid defensive positioning, weakness across most other key sectors, including energy, mining, and industrials, dragged the TSX benchmark down.
Fed hikes rates for the first time in over three years
While raising its benchmark interest rate for the first time since June 2023, the Fed pointed to persistent inflation and continued resilience in the U.S. economy.
Fed Chair Kevin Warsh said recent inflation readings had not shown enough improvement to convince policymakers that underlying price pressures were moving toward the central bank’s 2% target at a sufficient pace.
The Fed’s latest median projections put the appropriate federal funds rate at 4.1% at the end of this year and next year, suggesting borrowing costs could remain elevated for some time.
Top TSX Composite movers and active stocks
Athabasca Oil, Advantage Energy, Strathcona Resources, and Spartan Delta were the worst-performing TSX stocks for the day, with each diving by at least 6.6%.
Despite the broader market selloff, shares of Dollarama (TSX: DOL) jumped 5.5% to $174.56 per share, making it the day’s top-performing TSX stock. This rally in DOL stock followed the value retailer’s stronger second-quarter (ended on August 2) results and an upward revision to its Canadian sales guidance.
Last quarter, Dollarama’s quarterly sales rose 17.6% year over year, while net profit climbed 8.7% to $349.3 million with the help of a 5.4% increase in its Canadian comparable-store sales. Encouraged by its year-to-date performance and strong customer demand, Dollarama raised its fiscal 2027 Canadian comparable-store sales growth outlook to 4% to 4.5% and increased its new-store opening target to 65 to 75, boosting investor confidence.
TransAlta, Bird Construction, and Canadian Utilities also inched up by at least 2.9% each, making them among the day’s top gainers on the Toronto Stock Exchange.
According to the exchange’s daily trade volume data, Canadian Natural Resources, Enbridge, Cenovus Energy, BCE, and Telus were the five most active TSX stocks.
TSX today
Crude oil prices continued to ease for the second consecutive session in early trading on Thursday, which could pressure TSX energy stocks at the open today. At the same time, however, gold, silver, and copper prices jumped sharply, pointing to a recovery in TSX mining shares.
Beyond commodities, Canadian investors will watch for signs of Middle East diplomacy after U.S. president Donald Trump suggested that Washington was hopeful that it was nearing the end of its war with Iran and claimed direct contact with Iranian officials.
Meanwhile, Canada-U.S. trade tensions also remain in focus as Ottawa seeks closer economic ties with the European Union. European Commission president Ursula von der Leyen has floated an “associate member” framework for Canada.
These developments could keep the TSX volatile today, although stronger metals prices may support the resource-heavy index after two straight sessions of losses.
On the economic releases front, TSX investors may want to keep an eye on the latest monthly manufacturing and weekly jobless claims data from the U.S. this morning.
Market movers on the TSX today
