TSX Under Pressure: Commodities Decline and Trade Tensions Weigh on Canadian Markets

The Toronto Stock Exchange (TSX) opened lower this week as a trifecta of declining commodities—energy, gold, and softwood lumber—intersected with escalating trade tensions to create a volatile backdrop for Canadian investors. While the TSX briefly rallied to a near three-week high on April 23, gains were fragile, reflecting the market’s reliance on commodities and its vulnerability to geopolitical headwinds.

Energy: The Engine of Volatility

The energy sector remains the TSX’s Achilles’ heel. On April 23, WTI crude surged 2% to $64.31/barrel after U.S. sanctions targeted Iran’s energy infrastructure—a temporary reprieve for Canadian producers. However, broader trade uncertainties continue to drag on prices. Companies like Vermilion Energy (VET.TO) and Cenovus Energy (CVE.TO) have seen sharp declines, with VET.TO plummeting over 14% year-to-date.

The Energy Capped Index’s 6.8% drop this month underscores the sector’s sensitivity to both oil prices and trade policy. With U.S. tariffs and supply chain disruptions looming, energy stocks face a dual threat: falling demand and rising costs.

Gold: A Flickering Safe Haven

Gold prices, traditionally a refuge during instability, have been a mixed blessing. While mining stocks like Energy Fuels (EFRU.O) and Calibre Mining (CMG.TO) surged on safe-haven demand, gold’s retreat from record highs on April 23 caused the materials sector to fall 1%. The Bank of Canada noted that gold’s role as a stabilizer is now contingent on geopolitical calm—a precarious position given current tensions.

The Softwood Lumber Crisis: A Microcosm of Trade Wars

The U.S. decision to impose a 34% tariff on Canadian softwood lumber, effective fall 2025, has sent shockwaves through forestry-dependent regions. This tariff, paired with Canadian retaliatory measures on U.S. vehicles, exemplifies the escalating bilateral trade war. The exclusion of Mexico from these countermeasures highlights a strategic realignment in North American trade dynamics—a shift that could redefine supply chains for years.

Trade Tensions: A Global Squeeze on the TSX

The U.S.-China trade war has indirectly pressured Canadian markets through two mechanisms:
1. Semiconductor Restrictions: New U.S. export controls on China have disrupted global supply chains, impacting Canadian tech firms like Shopify (SHOP.TO) and Dye & Durham (DDS.TO).
2. Auto Tariffs: U.S. auto tariffs and Canadian countermeasures have hit financials and manufacturing, with banks like Royal Bank of Canada (RY.TO) declining 2.5% in April.

Sector Snapshots: Winners and Losers

• Tech: Canadian tech stocks have underperformed, with BlackBerry (BB.TO) down 8% amid supply chain risks.
• Logistics: Cargojet (CJT.TO) surged 15% as trade disruptions boosted air cargo demand.
• Uranium: Energy Fuels (EFRU.O) rose 22% on speculation of U.S. nuclear energy stimulus—a rare bright spot in a dimming sector.

The Bottom Line: Navigating the TSX’s Crossroads

The TSX’s current slump reflects its commodity-heavy structure and exposure to trade wars. Key data points underscore the fragility:
- Energy: Oil prices are 12% below their 2025 highs, with WTI averaging $62/barrel in April.
- Gold: Spot gold has fallen 4% from its April peak, now trading near $2,000/oz.
- Trade: Canadian exports to the U.S. fell 3.2% in Q1 2025, with softwood lumber alone accounting for 15% of the decline.

Investors should brace for further volatility. The Bank of Canada’s decision to hold rates at 2.75% signals an acknowledgment of trade-related risks, but with inflation at 3.1%, policymakers are walking a tightrope.

Final Analysis: Positioning for the Next Phase

The TSX’s path forward hinges on three variables:
1. Oil Prices: A rebound above $70/barrel could stabilize energy stocks.
2. Trade Deals: A resolution to softwood tariffs or U.S.-China negotiations could ease sector-specific pressures.
3. Geopolitical Calm: Reduced rhetoric from Washington and Beijing would allow gold and tech stocks to stabilize.

For now, the TSX’s best hope lies in the resilience of logistics plays like Cargojet and niche commodities like uranium—a far cry from the diversified strength markets crave. Until trade wars cool, Canadian investors must prepare for more turbulence.

Conclusion: The TSX’s April slump is a stark reminder of its reliance on global commodity cycles and trade policies. With energy and softwood lumber prices under pressure, and tech sectors collateral damage in the U.S.-China conflict, the path to recovery requires more than a temporary oil rally. Investors must prioritize sectors insulated from trade wars—like logistics—and be ready to pivot as geopolitical winds shift. The Canadian market isn’t broken, but its recovery will be neither swift nor certain.