Toronto Stocks Rebound as Trade Tensions Ease: Navigating Opportunities in Mining, Tech, and Energy

The removal of Canada's Digital Services Tax (DST) and the resumption of U.S.-Canada trade talks have created a pivotal inflection point for Toronto-listed equities. As bilateral tensions ease and regulatory uncertainty fades, sectors such as mining, energy, and technology are positioned to capitalize on renewed investor confidence. However, not all companies will thrive equally—vulnerabilities remain for firms reliant on U.S. tech revenue or grappling with governance risks. Below, we dissect the strategic implications for investors and highlight actionable opportunities.

The Catalyst: Trade Reconciliation and the DST Rescission

The Canadian government's June 2025 decision to abandon the DST, which had threatened a $2 billion payment from U.S. tech firms, marked a critical step toward resolving bilateral trade disputes. The tax's retroactive nature and perceived bias against American companies had fueled U.S. opposition, with President Trump framing it as a “blatant attack.” By rescinding the DST, Canada prioritized trade stability over short-term fiscal gains, aligning with its goal of finalizing a comprehensive trade deal by July 21, 2025.

This strategic pivot has injected optimism into sectors tied to cross-border commerce. For resource-heavy industries like mining and energy, the removal of trade-related tailwinds has bolstered valuations. Meanwhile, technology firms face mixed outcomes: while the DST's cancellation eases pressure on U.S. peers, Canadian companies must now compete in a landscape where regulatory scrutiny—particularly around AI and environmental claims—has intensified.

Sector-Specific Opportunities and Risks

1. Mining: The Engine of Recovery

The TSX Venture 50's mining sector has been the standout performer, with companies like Power Metallic Mines (TSXV:PNPN) and Artemis Gold (TSXV:ARTG) driving gains through asset quality and operational milestones.

• Power Metallic Mines: Its Nisk project in Québec—a polymetallic asset with high-grade nickel, copper, and platinum—has propelled a 365% share price surge since 2024. The company's rebranding underscores its pivot to diversified metals, a strategy aligning with global decarbonization trends.

• Artemis Gold: Achieved its first gold pour in January 2025 and is on track for commercial production by mid-2025. Its Blackwater mine, with over 10 million ounces of gold resources, positions it as a low-cost producer.

Opportunity: Gold and base metals producers, particularly those with high-grade deposits and advanced-stage projects, offer asymmetric upside. Artemis Gold and Montage Gold (TSXV:MAU)—which is advancing its Koné gold project in Côte d'Ivoire—deserve attention.

Risk: While demand for critical minerals (e.g., lithium for EVs) is robust, geopolitical risks persist. For instance, Q2 Metals (TSXV:QTWO)'s lithium projects in Québec face potential delays if U.S.-Canada trade talks fail to address supply chain concerns.

2. Energy: Navigating Commodity Cycles

Energy stocks like Sintana Energy (TSXV:SEI) and Q2 Metals are benefiting from both rising commodity prices and geopolitical tailwinds.

• Sintana Energy: Its Colombian oil projects and strategic expansion into Dallas-based operations have fueled a 293% share price rise since 2024. The company's focus on conventional oil—less exposed to ESG pressures than shale—adds stability.
• Q2 Metals: Its lithium portfolio, including the Cisco project in Québec, taps into the EV boom. However, lithium prices remain volatile, and firms without long-term offtake agreements (e.g., with battery manufacturers) face execution risks.

Opportunity: Investors should prioritize firms with low debt, diversified projects, and partnerships (e.g., Sintana's Dallas office).

Risk: Energy stocks are sensitive to interest rate fluctuations and oil price swings. Companies without hedging strategies, like Q2 Metals, could underperform if lithium prices soften.

3. Technology: Growth Amid Regulatory Crosscurrents

The TSX tech sector's rebound has been uneven, with firms leveraging AI and ESG trends outperforming laggards.

• Shopify (TSX:SHOP): Its 19% revenue growth in Q1 2025 reflects success in AI-driven e-commerce and international expansion. The company's recurring revenue model and partnerships in Southeast Asia position it as a leader.
• Nuvei Corp (TSX:NVEI): Rebounding from 2023's slump, Nuvei's cross-border payment solutions and Web3 integrations have attracted institutional investors.

Opportunity: Firms with defensible moats—such as Absolute Software (TSX:ABST)'s endpoint security or Coveo Solutions (TSX:CVO)'s AI-driven enterprise tools—offer resilience.

Risk: Regulatory hurdles loom large. The Canadian Securities Administrators (CSA) now require detailed disclosures on AI risks, and the Competition Act's crackdown on “greenwashing” penalizes overstated environmental claims. Firms like HIVE Digital Technologies (TSXV:HIVE)—transitioning to green data centers—must ensure their ESG narratives are backed by hard data.

Governance and Regulatory Risks to Avoid

Not all Toronto stocks are created equal. Firms with governance gaps or reliance on U.S. tech revenue face headwinds:

• AI Washing: Companies making vague claims about AI integration (e.g., “AI-powered platform”) without substantiating benefits risk losing investor trust. Proxy advisory firm Glass Lewis now flags boards failing to oversee AI risks.
• ESG Missteps: Nuvei Corp and others must avoid overstating environmental benefits. The CSA now requires “adequate and proper tests” for ESG disclosures.
• Trade-Sensitive Tech: Firms with revenue concentrated in U.S. digital services—such as those facing antitrust scrutiny—may underperform if bilateral tensions resurface.

Investment Strategy: Positioning for Resilience

Investors should focus on gold producers, diversified industrials, and tech firms with defendable moats, while avoiding laggards:

1. Buy Gold Stocks:
2. Artemis Gold: Near-term production milestones and low costs make it a top pick.

3. Montage Gold: Its 16-year mine life and cost discipline offer steady returns.

4. Diversify into Energy:

5. Sintana Energy: Stable oil prices and conventional project profiles reduce volatility.

6. Tech Selectivity:

7. Shopify: Strong recurring revenue and AI adoption justify its premium valuation.

8. Coveo Solutions: High gross margins (75%) and enterprise contracts provide defensive traits.

9. Avoid:

10. Firms with governance issues (e.g., inadequate AI disclosures).
11. Lithium plays without offtake agreements (e.g., Q2 Metals).
12. Tech services reliant on U.S. consumer spending.

Conclusion: A New Era of Trade-Driven Growth

The removal of the DST and the revival of U.S.-Canada trade talks have created a fertile environment for Toronto equities. Mining and energy sectors are leading the recovery, while tech firms must prove their claims to thrive. Investors who focus on operational execution, diversified revenue streams, and governance rigor will be best positioned to navigate this evolving landscape. As the July 21 trade deadline approaches, the path forward remains clear—for those willing to separate signal from noise.

The author holds no positions in the securities mentioned.