Reversing yesterday's surge, Canadian stocks slumped on Wednesday as the market was weighed down by a plunge in the materials sector due to a steep decline in gold prices, while investors assessed monetary policy decisions by the central banks of Canada and the U.S.
After opening lower than yesterday's close, today the benchmark S&P/TSX Composite Index traded firmly negative before settling at 32,312.67, down by 616.42 points (or 1.87%).
Of the 11 sectors, only the energy sector posted gains today, supported by soaring oil prices.
U.S. President Donald Trump's invite for NATO member-nations to support the U.S. forces in securing the Strait of Hormuz was ignored. The allies were reluctant to get involved in the ongoing gulf war as the U.S. did not consult them before it struck Iran.
Reportedly, Iran has refused to discuss any peace plans with the U.S., diminishing the expectations of an end to the war or even a ceasefire.
While Israel targeted Iran and Lebanon, Iran attacked its neighbors.
As a result, the U.S. dollar strengthened. Gold lost its safe-haven appeal to the dollar, and hence, the mining-stocks-linked materials sector plunged, weighing on the market.
On Monday, Statistics Canada's data showed that the year-on-year inflation rate fell to 1.80% in February from 2.30% in January, while month-on-month, it increased 0.50%.
Annual core inflation fell to an 11-month low of 2.30% in February from 2.60% in January, while month-on-month it rose 0.40%.
In line with market expectations, the Bank of Canada kept interest rates at the current level of 2.25%, citing the uncertainty due to the Middle East conflict as the primary reason.
Of note, this is the third consecutive time the BoC chose to leave the benchmark rate unchanged.
The central bank's next interest rate announcement is scheduled for April 29. BoC Governor Tiff Macklem stressed that if fuel prices stoke inflation further, the bank may raise borrowing costs.
The crucial Canada-United States-Mexico Agreement, a free-trade pact, is coming up for renewal in a few months.
Canadian officials are in the U.S. to meet with their U.S. counterparts and carry the deal forward to benefit both countries.
Canada has a lot at stake as the agreement has allowed a majority of Canadian exports to land in the U.S. without suffering the U.S. tariffs.
However, doubts about a smooth renewal have already surfaced as months before, Trump hinted at withdrawing from the arrangement.
In an interview with Fox Business, U.S. Trade Representative Jamieson Greer remarked that the CUSMA negotiations with Canada have fallen behind in comparison to those with Mexico.
In the U.S. today, data provided by the U.S. Labor Department revealed that the producer prices rose by 0.70% month-over-month in February, higher than forecasts of 0.30%. Year-over-year, prices jumped 3.40% in February.
Further, core producer prices rose by 0.50% from the previous month in February, slowing from a 0.80% advance in January and year-on-year, prices surged by 3.90%.
The U.S. Federal Reserve held the interest rates unchanged in the 3.50% to 3.75% range.
Energy sector alone gained in today's trading.
Among the individual stocks Vermilion Energy Inc (3.21%), Parex Resources Inc (2.80%), Cenovus Energy Inc (1.83%), and Suncor Energy Inc (1.21%) were the prominent gainers.
Major sectors that lost in today's trading were IT (1.67%), Consumer Discretionary (1.74%), Consumer Staples (2.23%), and Materials (5.64%).
Among the individual stocks, Dye and Durham Limited (3.91%), Shopify Inc (2.90%), Celestica Inc (2.73%), Seabridge Gold Inc (12.36%), Discovery Silver Corp (11.96%), and Novagold Res Inc (11.85%) were the notable losers.
Mda Space Ltd (5.80%), Ats Corporation (4.12%), and Methanex Corp (3.57%) were among the prime market-moving stocks today.
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Market Analysis
May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.