Investing.com -- Canada’s main stock index closed lower on Monday, with U.S. President Donald Trump’s tariff policy in focus and investors awaiting a slew of key corporate earnings reports this week.
By the 4:00 ET close, the bellwether S&P/TSX 60 index slipped by 10.2 points or 0.7% in trading
Toronto’s S&P/TSX fell 184 points or 0.8% following the previous session, in which the index lost 86.02 points or 0.4%. The average ticked up by 2.6% in a holiday-shortened week, the biggest such advance since September.
Underpinning some positive sentiment were expectations that the Bank of Canada will resume cutting interest rates in the coming months, after keeping borrowing costs on hold on Wednesday. Rate-sensitive sectors like real estate and utilities rose.
U.S. stocks fall
Trading in U.S. stock indexes was also lower on Monday, as investors gauged the impact of Trump’s tariff plans and assessed his scathing remarks about Federal Reserve Chair Jerome Powell.
At the 4:00 ET close, the S&P 500 dropped 124.5 points or 2.4%, the Nasdaq Composite fell 415.6 points or 2.6%, and the Dow Jones Industrial Average declined by 971.8 points or 2.5%.
The main averages on Wall Street were closed on Friday, while some markets, including much of Europe, were on holiday for Easter Monday, meaning liquidity was relatively thin.
"[I]t’s very likely April 2 was the high-water mark for tariffs, and we fully expect ongoing negotiations to yield ’deals’ that bring down the duty burden," analysts at Vital Knowledge said, referring to the date when Trump revealed his sweeping reciprocal tariffs on both friends and foes alike.
Trump officials have said they are aiming to sign dozens of agreements during the ongoing 90-day pause to the elevated duties on a host of nations, although experts have cast doubt over whether this will be achievable.
Meanwhile, Trump has revived threats to oust Powell from his role at the helm of the U.S. central bank, accusing him of moving to slowly to bring down interest rates. However, the New York Times (NYSE:NYT) (NYSE:NYT) has reported that the president is aware that the action may shake already-jittery global financial markets.
Against this backdrop, investors are gearing up for a bevy of corporate earnings reports this week.
Highlighting the slate of returns will be Google-parent Alphabet Inc (NASDAQ:GOOGL) and Elon Musk-helmed electric carmaker Tesla Inc (NASDAQ:TSLA), who will become the first of the so-called "Magnificent Seven" mega-cap tech names to unveil their latest results.
Traders will likely be keen to see if the figures and potential guidance provide some relief for markets still reeling from massive ructions in the recent weeks sparked by Trump’s tariff policies. In recent years, the Magnificent Seven stocks have largely been the driving force behind U.S. equity market gains, although shares in these businesses have declined so far this year.
The S&P 500 VIX Futures volatility index, a gauge of investor fears, has dipped to around 30 after cresting at roughly 60 during the levy-fueled market turmoil earlier this month. The long-term median level is at around 17.6, LSEG Datastream figures cited by Reuters showed.
Chipmaker Intel Corporation (NASDAQ:INTC), drug manufacturer Merck (NSE:PROR) & Company Inc (NYSE:MRK), tech firm International Business Machines (NYSE:IBM), and Pampers-parent Procter & Gamble Company (NYSE:PG) are also on the earnings docket this week, as well as American Airlines Group (NASDAQ:AAL). The carrier’s rival United Airlines (NASDAQ:UAL) last week provided a two-pronged outlook for the year, including one scenario forecasting a recession that sparks a deep hit to revenue and profit.
Elsewhere, shares in Netflix Inc (NASDAQ:NFLX) edged higher in premarket U.S. trading after executives at the streaming service suggested that they were confident that it could withstand the economic fallout from Trump’s tariffs.
Recent figures have pointed to deteriorating U.S. consumer sentiment and spiking inflation expectations, leading to some increased concerns that price-conscious customers may rein in nonessential spending, including on streaming subscriptions.
But, following better-than-expected quarterly results published after the close of U.S. trading last Thursday, Netflix co-CEO Greg Peters said the group has yet to see a significant change in consumer behavior.
Oil prices drop
Meanwhile, oil prices dropped on indications that progress was being made in talks between the U.S. and Iran, which analysts say could boost supplies. Worries that a tariff-fueled economic downturn could dent demand also weighed on crude.
By 5:40 ET, WTI Crude fell 2.1%, pricing in at $62.69 a barrel, while Brent Oil lost 2.2%, moving to $66.50 per barrel.
Gold touches record high
Gold prices hit a new record high on Monday, supported by fears over a tit-for-tat trade war between the U.S. and China as well as a weakening dollar against a basket of currency peers.
XAU/USD had risen by 2.8% to $3,424.37 by 5:40 ET. Gold Futures expiring in June also surged by 3.1% to $3,435.25/oz.
Bolstering bullion was a decline in the US Dollar Index Futures to a three-year low, which can make the yellow metal less expensive for foreign buyers and drive up demand. Gold is also seen as a relative safe haven during times of economic uncertainty or market upheaval.
(Scott Kanowsky also contributed to this article)