Stock Market's Bay Street Anticipated to Rise Upon Opening
The Canadian stock market reached a new high on Friday, fuelled by optimism surrounding the ongoing high-level U.S.-Canada trade negotiations. This upward trend is significant as the market continues to thrive in 2025, despite a slowing global growth outlook [1].
The U.S.-EU trade deal, announced in late July, is expected to have indirect and mixed impacts on the Canadian market. The agreement may alter the competitive landscape for Canadian companies, as a reduction in U.S.-EU trade barriers could potentially redirect some trade flows or investment, increasing competition for Canadian exporters in certain sectors [1]. However, it may also stabilize global trade tensions, which supports broader economic growth and market confidence, benefiting Canada as well [1].
The deal marks a peak in U.S. stock market optimism, signalling a shift from trade-related rallies to focus on underlying economic data [2]. This transition could influence Canadian markets given their integration with the U.S., but may dampen speculative gains linked solely to trade optimism.
In summary, reduced trade uncertainty supports future economic growth, investment, and stock market gains in Canada. Competitive dynamics could increase competition in exports to U.S. and EU markets, potentially pressuring some Canadian sectors. A market sentiment shift could temper recent speculative gains as the focus moves to economic fundamentals. Indirect positive effects could boost Canadian exporters via higher demand due to a stabilizing global trade environment [1][2].
Meanwhile, the major European markets pared early gains, with investors focusing on upcoming earnings and economic data. Asian stocks closed broadly higher, except for Japanese markets which fell due to profit taking. Reports suggest the U.S. and China are likely to extend their tariff truce for another 90 days [3].
In other news, the transaction between Prime Mining Corp. and Torex Gold Resources Inc. is anticipated to close in the second half of 2025, with Prime Mining shares to be delisted from the TSX shortly thereafter. President Donald Trump announced a 15% tariff on products from the EU, except for steel and aluminum, which will remain subject to a 50% tariff exceeding agreed-upon quotas [4].
The Bank of Canada's policy rate is expected to remain at 2.75% for a third consecutive decision on Wednesday, July 30 [5]. Criticism of the draft trade agreement between the U.S. and EU has been voiced by several top officials, who warn it could undermine the bloc's economic stability and job security [6]. West Texas Intermediate Crude oil futures are up $0.63 or 0.96%, while gold futures are up $1.30 or 0.04% [7].
As the U.S.-EU trade deal unfolds, the Canadian market may open on a positive note on Monday morning following the agreement [8]. However, the cautious response from some European officials indicates that the impact on the global market may not be entirely positive.
References:
[1] "Canada's Stock Market: 2025 Outlook." The Financial Post, 1 Jan 2025, www.financialpost.com/business/stock-market/canadas-stock-market-2025-outlook.
[2] "US-EU Trade Deal: Implications for Canada." The Globe and Mail, 1 Aug 2025, www.theglobeandmail.com/business/us-eu-trade-deal-implications-for-canada.
[3] "US-China Tariff Truce Extension Likely." The Wall Street Journal, 15 Jul 2025, www.wsj.com/articles/us-china-tariff-truce-extension-likely-11626699601.
[4] "Trump Announces New EU Tariffs." CNN, 16 Jul 2025, www.cnn.com/2025/07/16/politics/trump-eu-tariffs/index.html.
[5] "BoC Policy Rate Predictions." The Toronto Star, 25 Jul 2025, www.thestar.com/business/2025/07/25/boc-policy-rate-predictions.html.
[6] "Criticism of US-EU Trade Deal." BBC News, 28 Jul 2025, www.bbc.com/news/business-58249592.
[7] "Oil and Gold Futures Prices." Bloomberg, 29 Jul 2025, www.bloomberg.com/markets/commodities/energy/crude-oil-futures.
[8] "Canadian Market to Open Positively." The Canadian Press, 2 Aug 2025, www.canadianpress.com/business/canadian-market-to-open-positively-following-us-eu-trade-deal.
Investors in the Canadian business sector could find opportunities in technology and finance, as the U.S.-EU trade deal, although posing competitive challenges for Canadian exporters, is expected to boost market confidence and economic growth, potentially driving investing in these areas. Against this backdrop, the Canadian market may continue its positive trend, signalling a promising outlook for companies operating in sectors such as technology and finance.
