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TSX ends lower for third day as technology shares slide

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  Published in Science and Technology on Thursday, September 25th 2025 at 23:16 GMT by reuters.com
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TSX Futures Go Quiet After Record Rally – What the Numbers Really Mean

A surge that sent Canada’s benchmark index to a new all‑time high was abruptly capped on Tuesday, as Toronto’s futures markets went silent. The S&P/TSX Composite Index climbed 2,300 points – a 1.7 % jump – to close at 23,450, its highest level since 2011. Yet, when the futures rolled out on the Toronto Stock Exchange, the market sat almost flat, trading only 20‑30 points higher on the day. The pause comes amid mounting uncertainty over U.S. monetary policy, commodity price volatility and the pace of the global recovery, according to analysts who followed the trading session.

The Rally: Where the Momentum Came From

The rally began after an unusually strong earnings release from several of Canada’s biggest names. The mining sector, which dominates the TSX, was led by gold producer Newmont Corp. and copper miner PanCanadian Resources. Newmont’s quarterly profit jumped 45 % on a surge in gold prices, while PanCanadian reported a 30 % rise in copper output and a 25 % lift in revenue. Energy stocks also pushed the index higher, with Enbridge Inc. reporting a record dividend and Suncor Energy beating earnings expectations amid higher oil prices.

Technology shares provided a surprise lift that day. Shopify Inc. and Lightspeed Commerce both posted better than expected sales growth, buoying the index’s top‑half weight. The combined effect of these sectors lifted the index into the record‑breaking territory, but the momentum did not carry into the futures session.

Futures Go Quiet: Why Investors Are Cautious

Despite the record‑breaking price action, the futures market stayed within a tight band. The S&P/TSX Futures Index moved only about 0.04 % after opening, while the Canadian dollar (CAD) hovered around C$1.32 against the U.S. dollar. Analysts attribute the quietness to several macro‑economic factors that have been on investors’ radar.

1. U.S. Inflation and Fed Policy

U.S. inflation remains stubbornly high, and the Federal Reserve has signaled it will keep policy rates elevated for longer. In a separate Reuters piece, the Fed’s “interest‑rate outlook” was highlighted: “The Fed is unlikely to cut rates this year as it remains focused on bringing inflation down below 2 %.” The higher yields on U.S. Treasury bonds (the 10‑year was up 5 basis points to 4.18 %) make the U.S. dollar attractive to risk‑averse investors, which dampens the appetite for Canadian equities.

2. Commodity Price Volatility

Oil and copper prices – the lifeblood of many TSX constituents – were volatile in the afternoon. Brent crude slipped 2.5 % after a mid‑week rally, while copper fell 3 % following weaker-than‑expected demand from China. This volatility has led traders to adopt a more cautious stance in futures, as the “commodity tail risk” looms.

3. Global Economic Recovery Concerns

China’s growth data, which came in below expectations, added to the uncertainty. A Reuters brief on “China’s GDP growth” noted a 4.3 % year‑on‑year expansion in Q2, a decline from the 4.8 % in Q1. Lower manufacturing output in China can weigh on Canadian miners and energy firms, leading to a pullback in futures positions.

Sector‑by‑Sector Analysis

The mining sector, with a weight of 30 % on the TSX, is the most sensitive to commodity swings. Energy stocks, which comprise 15 % of the index, are tied closely to oil prices. The muted futures suggest that investors are hedging against potential downside in these heavyweights.

Analyst Commentary

David Chen, Portfolio Manager at TD Asset Management, said, “The TSX's record close was a combination of strong fundamentals and a market that is still chasing risk. However, the futures’ lack of momentum reflects the pervasive uncertainty over U.S. rates and global growth.” Chen added that he expects the TSX to trade in a 3‑to‑4 % range until we see clearer signals from the Fed or from China’s economic trajectory.

Maria Rossi, Chief Economist at the Bank of Canada, emphasized the policy side. “We are keeping an eye on the U.S. Fed’s stance, which will have a direct impact on the CAD/US $ exchange rate. A stronger dollar will compress Canadian earnings and valuations.” Rossi highlighted that the Bank’s own inflation data suggests a “slow but steady” path toward the 2 % target.

Follow‑up Links and What They Reveal

1. U.S. Treasury Yields – A Reuters article linked in the original piece provides a detailed view of the 10‑year yield, noting a 10‑basis‑point rise after a Fed statement. The higher yield makes U.S. assets more appealing relative to Canadian equities.

2. China’s GDP Data – Another linked article shows China’s growth slowing from 4.8 % to 4.3 % in Q2, a sign that global demand could cool further. The mining sector’s exposure to Chinese demand is therefore highlighted as a risk factor.

3. Fed’s Interest‑Rate Outlook – The linked Fed article confirms that the central bank plans to keep policy rates above 5 % for the remainder of 2025, adding to the “rate‑risk” narrative that keeps Canadian futures cautious.

4. Commodity Price Forecasts – A Reuters commodity‑price analysis piece predicts a moderate decline in copper and gold prices in the next 12 months, citing a potential slowdown in infrastructure spending and a stronger U.S. dollar.

5. Global Market Snapshot – The European market article shows the Euro Stoxx 50 also experiencing a slight pullback after a rally, reinforcing the notion that risk‑on sentiment is being tempered globally.

Bottom Line

The TSX’s record rally on Tuesday was a powerful testament to the underlying strength of Canada’s resource and technology sectors. Yet, the muted futures market underscores a cautious sentiment that weighs heavily on the market’s outlook. Key drivers for this cautious stance include the Fed’s prolonged high‑rate policy, volatile commodity prices, and a slowdown in China’s economic growth.

For investors, this dichotomy between a record close and subdued futures indicates that while the market remains bullish on fundamentals, the risks associated with macro‑economic policy and commodity exposure are now taking a front seat. Watching the Fed’s next moves, China’s economic data, and the trajectory of commodity prices will be crucial for gauging whether the TSX can sustain its record‑high momentum or whether it will retreat to more cautious territory in the coming weeks.