TSX Closer: Up For a Second Day On Elevated Commodity Prices; Desjardins Offers the BoC Some Advice

04:23 PM EDT, 10/23/2025 (MT Newswires) -- The Toronto Stock Exchange closed higher for a second day on Thursday, boosted by elevated commodity prices, even as Desjardins is telling the Bank of Canada (BoC) what it should do to protect Canadian households amid warnings of an equity market correction.

Buoyed by higher gold and oil prices, the resources-heavy S&P/TSX Composite Index closed up 203.30 points to 30,186.28, adding to the near 100 points gained Wednesday. Most sectors were higher, led by Info Tech up 2.1%, with Energy up near 2% and Base Metals up near 1.5%. There were modest losses for Utilities and Industrials.

Of commodities, gold prices were up midafternoon on Thursday. This follows two days of losses after correcting from the metal's record high on Monday. Gold for December delivery was last seen up $68.10 to US$4,132.70 per ounce, staying under the Oct. 20 record close of US$4,359.40.

Also, West Texas Intermediate crude oil closed sharply higher, rising for a third day after the United States and the European Union imposed fresh sanctions on Russia's oil and gas production in another bid to end its war on Ukraine. WTI crude oil for December delivery closed up $3.29 to settle at $61.79 per barrel, while December Brent oil was last seen up $3.34 to $65.93.

Against the backdrop, Royce Mendes, Head of Macro Strategy at Desjardins published a note entitled 'Strategic View: Market Volatility & the Canadian Economy' in which he noted a recent article by former IMF Deputy Managing Director Gita Gopinath warning that an equity market correction could wipe out US$20 trillion in wealth for American households. As she notes, Mendes said, that's equivalent to roughly 70% of U.S. GDP and could reduce economic activity by as much as two full percentage points. Gopinath based her calculations on a market drawdown of similar magnitude to the dotcom crash of the early 2000s.

Mendes said a correction of that scale would hurt Canadian households too, but the economic fallout might not be as severe. He noted Desjardins analysis suggests a dotcom-style drawdown in Canada would erase household wealth equivalent to about 45% of GDP, adding the more muted impact stems from two key factors.

"First," Mendes said, "Canadian portfolios are more skewed toward domestic equities, which have historically been, and still are, less exposed to the tech sector. Second, households north of the border hold a smaller share of their wealth in publicly listed equities. While headline data on equity and mutual fund holdings might suggest Americans and Canadians have similar stock exposure, the comparison is misleading. Canadians tend to access fixed income through mutual funds, whereas Americans more often hold bonds directly."

This lower exposure to tech and equities means Canadian households have not fully participated in the recent bull market, but it also means they are less vulnerable to a correction, Mendes said, before adding: "That said, Canadian households aren't necessarily facing any less risk. Their portfolios are heavily tilted toward an asset class that's already under pressure."

Mendes noted falling home prices in many provinces have constrained wealth accumulation in Canada. Since the first quarter of 2022, Canadian household net worth has risen just 7%, well below the 16% growth American households have enjoyed. Despite the decline in home prices and gains in equities, real estate still accounts for roughly 40% of household assets in Canada, in contrast to 25% in the United States.

"While the central bank has limited influence over equity markets," Mendes said, "the Bank of Canada should be paying close attention to the housing market. Most homeowners still have substantial equity, but that cushion is shrinking each month. After several years of declines, stabilizing house prices should be a priority for monetary policymakers aiming to restore the economy to full health."

Meanwhile, RBC Capital Markets in a Canadian Rates Strategy note said it expects a follow on cut from the BoC at its October 29 meeting, with dovish BoC inter-meeting communication and middling dataflow supporting the move. RBC's view since the September cut was that they did not re-start the easing cycle for one cut, unless the data came significantly stronger before October meeting. "The data has not reached that bar," RBC said.

But while RBC sees a high chance of a cut, it said the fundamental ("should") case is not a home run, with core inflation still elevated and a growth-friendly budget expected the week after the meeting. "The two moves following a pause would be consistent with the with the pattern from the last hiking cycle (a pause followed by two final rate increases)," it added.

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