TSX closes higher amid ongoing U.S.-China trade talks

Investing.com -- Canada’s main stock index rose on Tuesday as investors awaited further developments around ongoing U.S.-China trade negotiations in London.

The Toronto Stock Exchange’s S&P/TSX composite index closed up by 50.5 points or 0.2%, offsetting the prior session loss of 53.33 points or 0.2%, again hovering near the record high levels reached on Friday ended.

By the 4:00 ET close, the S&P/TSX 60 bellwether index also rose 0.2%, or 3.6 points.

Yet losses were limited by hopes for progress in the talks between the U.S. and China, with President Donald Trump indicating that he was receiving good reports from officials at the gathering.

Meanwhile, analysts cited by Reuters argued that Canadian Prime Minister Mark Carney’s announcement that Canada will hit NATO’s military spending target of 2% of gross domestic product this year could bolster the potential for a trade deal with Washington.

The U.S. has placed pressure on Canada and other NATO members to raise defense expenditures.

According to Canadian Auditor General Karen Hogan, Canada’s purchase of 88 Lockheed Martin Corporation (NYSE:LMT) F-35 fighter jets will cost approximately C$27.7 billion ($20.2 billion), nearly 50% more than initially estimated.

Shares in jet maker Bombardier (TSX:BBDb) and aviation simulation group CAE (NYSE:CAE) (TSX:CAE) both jumped on Monday, but pared back some gains Tuesday.

Elsewhere, Brookfield Corp (TSX:BAM) stock finished 1.2% higher, as Scotiabank (TSX:BNS) cited a "tactical buying opportunity" after Monday’s declines.

U.S. stocks advance

U.S. stocks showed gains on the day amid continued U.S.-China trade negotiations.

At the 4:00 ET closing bell, the Dow Jones Industrial Average rose 0.25%, the S&P 500 added 0.55%, and the NASDAQ Composite advanced 0.6%.

Those moves follow a muted day on Wall Street as investors kept an eye on a day of trade talks between officials from the two largest economies in the world, with the discussions continuing into a second day.

Tesla (NASDAQ:TSLA) stock led Mag7 gains at 5.7% as it launched Robotaxis in Austin, Texas, and tensions between U.S. President Donald Trump and CEO Elon Musk eased. Of the launch, Musk said, "The streets will change very rapidly. Autonomous cars will be very common throughout the world in 2 to 3 years."

U.S.-China trade talks continue

Trade talks between the world’s largest economies began on Monday and have extended into Tuesday.

Investors are hoping that the talks will spur further deescalation in a bitter trade tariff exchange between the U.S. and China, after they agreed in May to temporarily slash their respective tariffs.

Focus this time round is on China’s restriction of rare earth minerals, which have threatened to greatly disrupt global supplies, as well U.S. restrictions on chip exports to China.

Trump had authorized his trade negotiators to walk back recent restrictions on chip and tech exports to help move along negotiations, the Wall Street Journal reported. Other reports showed that Trump was actively considering ending the restrictions to win favor with China, with Beijing’s restrictions on rare earth exports being a major point of contention.

However, speculation that Chinese officials are not satisfied with the talks, which threatens to strain already fragile optimism around a thawing in what has been a frosty relationship between the two sides.

Talks will continue tomorrow, said U.S. Treasury Secretary Scott Bessent, although he will be returning to Washington, leaving Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer to further the discussions.

"We have had two days of productive talks, they are ongoing," Bessent said. 

Gold lowers slightly

Gold prices were mostly steady, lowering slightly on Tuesday, with investors looking out for news from the U.S.-China trade discussions.

The yellow metal has clocked strong gains in recent weeks as heightened uncertainty over the U.S. economy and Trump’s trade policies drove up haven demand.

Increased geopolitical tensions, especially between Russia and Ukraine, have also fueled haven demand, as did a string of weak economic readings from China.

But this trend somewhat reversed on Monday, as Washington and Beijing kicked off high-level talks in London.

Spot gold fell 0.1% to $3,322.60 an ounce, while gold futures for August were down 0.3% at $3,344.75/oz by 5:45 ET.

Crude inches lower

Oil prices edged lower Tuesday, with traders anxiously awaiting the outcome of U.S.-China talks that could pave the way for easing trade tensions and improving fuel demand.

At 5:45 ET, Brent futures lost 0.6% to $66.61 a barrel, after rising to the highest since April 28 on Monday, and U.S. West Texas Intermediate crude futures dropped 0.9% to $64.72 per barrel.

The prospect of a U.S.-China trade deal has helped ease some demand concerns, with free-flowing trade expected to boost global economic activity and thus crude demand.

(Scott Kanowsky and Pratyush Thakur also contributed to this article)