Small Caps in Canada Stand Tall as Traders Brush Off Tariff Risk

Canada’s smaller stocks are holding up amended than their larger peers arsenic US President Donald Trump’s commercialized warfare shows fewer signs of slowing.

Author of the article:

Bloomberg News

Geoffrey Morgan

Published Feb 11, 2025  •  2 infinitesimal read

m{v1bnbtq(ofn(7tlhbldwyh_media_dl_1.png Bloomberg

(Bloomberg) — Canada’s smaller stocks are holding up amended than their larger peers arsenic US President Donald Trump’s commercialized warfare shows fewer signs of slowing.

Article content

Article content

Following a little cross-border commercialized skirmish past week, Canada’s small-cap scale climbed 0.7%, driven by gains successful cannabis and mining stocks, portion its large-cap counterpart, the S&P/TSX Composite, declined 0.4%. The fracas simmered down a spot aft the US agreed to postpone the levies for 30 days.

Article content

The outperformance continued connected Monday, erstwhile the S&P/TSX Small Cap Index roseate 1.2% aft Trump said helium would bid a 25% tariff connected alloy and aluminum imports, a large portion of which are sourced successful Canada. He made bully connected his committedness aft the markets closed and Prime Minister Justin Trudeau said Canada’s effect “will beryllium steadfast and clear”. 

To Colin Cieszynski, main marketplace strategist and portfolio manager astatine SIA Wealth Management successful Toronto, the small-cap scale is outperforming owed to a larger value successful mining and metals stocks, which person benefited arsenic the Loonie declined and golden prices gained.  

“The uncertainty has pushed up the terms of golden and commodities successful general. When the Canadian dollar falls, each other being adjacent successful commodities, you’d expect assets stocks to spell up,” Cieszynski said.

Gold mining companies, successful particular, person helped foodstuff the returns of the Canadian small-cap index, which has a astir 33% weighting successful materials and overmuch of that successful golden stocks. Solaris Resources Inc., Orla Mining Ltd. and Skeena Resources Ltd. each posted double-digit gains past week.

Article content

Investors are flocking to the small-cap golden assemblage with home production, said Travis Irwin, a portfolio manager focused connected small- and mid-cap stocks with Picton Mahoney Asset Management. “For Canadian home golden miners their costs are successful Canadian dollars and they are paid successful US dollars,” helium said.

Gold Stocks Shine successful Toronto arsenic Yawning Rate Gap Pummels Loonie

SIA Wealth’s Cieszynski besides said that the corners of Canada’s banal marketplace that tilt much heavy toward commodities and toward domestic-focused stocks are besides putting up wins, oregon arsenic helium enactment it, “the truly heavy Canadian companies,” similar telecommunications steadfast BCE Inc., which has a video streaming service.

To beryllium sure, Canadian markets have, successful aggregate, suffered a brutal stretch. Stocks connected the main benchmark shed a cumulative C$91 cardinal ($63.5 billion) successful marketplace value. Over the people of past week, Royal Bank of Canada, Brookfield Corp., Canadian Pacific Kansas City led those losses and dragged the country’s benchmark equity scale lower.

Still, the show of the commodities-linked stocks is evident successful Toronto successful wide and the small-caps successful particular.

“The database of reasons golden has been rising is plentifulness — from Chinese buying to fearfulness implicit each the governmental headlines,” Purpose Investments’s Chief Market Strategist Craig Basinger wrote successful a Monday note, adding that golden and commodity vulnerability tin beryllium a hedge for investors against rising inflation. “This is 1 of the reasons the TSX tends to outperform broader equity markets successful higher inflationary environments.”

Article content