TORONTO — Canada's main stock index gained more than 270 points on Friday as the federal government announced it would remove some of its retaliatory tariffs on U.S. goods, lifting hopes for a trade deal, while U.S. markets reached record high territory.
The move on Wall Street came as U.S. Federal Reserve chair Jerome Powell cracked open the door to lowering interest rates in the coming months in a speech in Jackson Hole, Wyo.
Anish Chopra, managing director with Portfolio Management Corp., said Powell’s speech at the Jackson Hole symposium took center stage during Friday’s trading session.
“Today's market moves are really a reaction to what U.S. Federal Reserve chair Jerome Powell effectively indicated about interest rates at his speech earlier today in Jackson Hole, and basically he's saying that the balance of risks looks like it's shifting,” he said.
The hope among investors had been that Powell would hint that the Fed's first cut of the year may be imminent. Wall Street loves lower rates because they can give a boost to the economy and to investment prices, even if they risk worsening inflation at the same time.
In sum, Powell said “the stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance.”
Chopra said the market is interpreting the speech to anticipate a "significant chance” the Fed will lower U.S. borrowing costs in September. He added that the market-implied probabilities of a September cut sit at around 90 per cent.
“So when investors look at the fact that there's a 90 per cent chance that interest rates will get cut, it's certainly very supportive of both equity and fixed income markets,” he said.
“And you're seeing that risk-on reaction, whether it's the TSX or the Dow Jones or the S&P 500, all those indices are moving up. And then if you look at the bond markets, you also see yields falling or bond prices rising. So, you've got both markets interpreting Powell's speech positively.”
The S&P/TSX composite index was up 277.70 points at 28,333.13.
In New York, the Dow Jones industrial average was up 846.24 points at 45,631.74. The S&P 500 index was up 96.74 points at 6,466.91, while the Nasdaq composite was up 396.22 points at 21,496.54.
The S&P 500 leaped 1.5 per cent for its first gain in six days and finished just shy of its all-time high set last week. Meanwhile, the Dow Jones Industrial Average soared 1.9 per cent to its own record after topping its prior high from December.
On Friday, Prime Minister Mark Carney announced Canada will drop some retaliatory tariffs on American products to match U.S. tariff exemptions for goods covered under the Canada-United States-Mexico Agreement.
“I think that gives a more positive backdrop for trade negotiations. Obviously … the tariffs are staying on U.S. steel, aluminum and on automotive goods,” Chopra said.
“But it just makes for a more positive backdrop for Canadian and U.S. negotiators when they come to negotiate trade.”
The Canadian dollar traded for 72.18 cents US compared with 71.96 cents US on Thursday.
The October crude oil contract was up 14 cents US at US$63.66 per barrel, while the December gold contract was up US$36.90 at US$3,418.50 an ounce.
— With files from The Associated Press
This report by The Canadian Press was first published Aug. 22, 2025.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
Daniel Johnson, The Canadian Press
