TSX Falls Near 3% at Midday With All Sectors Down

12:27 PM EST, 01/30/2026 (MT Newswires) -- The Toronto Stock Exchange is sharply lower in midday trading, plunging near 1,000 points with all sectors lower as fourth-quarter GDP data shows Canada is struggling for growth

The worst performers are miners (-6.6%), and info tech (-1.8%), followed by industrials (-1.7%). Bombardier (BBD-B.TO) is down over 5% to $234.90 after U.S. President Trump posted he will be "decertifying" all Canadian-made aircraft and threatening a 50% tariff on Canadian planes sold in the United States.

Tiago Figueiredo at Desjardins said the Canadian economy appears to have ended the year on very weak footing. Following a material contraction in October, economic activity remained subdued in November with a flat reading for GDP. Weakness across trade-related sectors was offset by rebounds in education and transportation/warehousing following the resolution of labor disputes. But Figueiredo also said some of the declines in manufacturing and wholesaling activity looks to have been be short lived, with Statistics Canada noting a global semi-conductor shortage contributing to the pullback in activity. Even the growth that has been seen is very concentrated in a handful of sectors, with the share of industries growing over the past six and 12 months extremely low, he added.

Statistic Canada's flash estimate for December points to a recovery of just 0.1%, with some of that coming from the manufacturing and wholesaling sectors, indicating a slight contraction in the economy over the fourth quarter, says Figueiredo. The Desjardins tracking for GDP by expenditure doesn't look much better, with the economy at best stagnating in the fourth quarter, which is broadly consistent with the Bank of Canada's latest forecasts.

While other analysts believe there is a "high bar" for further rate reductions, Desjardins continues to see risks heavily skewed to the BoC resuming its easing cycle in the near-term. So while its base case still assumes the BoC will remain on hold for the rest of the year, it is not all that far off from seriously considering changing that call.

Marc Ercolao at TD Economics said Canada's economy had "cruised into year-end at stall speed". He noted with November's print and flash estimates for December, economic growth is tracking a mild contraction for Q4-2025. TD expects GDP growth in the fourth quarter to land roughly flat, in line with the BoC's recent projections.

Ercolau is also maintaining the view that the BoC has reached the end of their interest rate easing cycle..

RBC noted the preliminary estimate for December points to a small rebound (+0.1%) with early indicators for December showing strength in manufacturing and wholesale activity partly offset by softer retail spending, weaker home resales, and a partial retracement in hours worked. RBC said monthly GDP estimates are "highly revision prone", but as reported are tracking a -0.5% annualized decline in the firt quarter, below both RBC's current base-case forecast of 0.5% and the BoC's flat projection published in the January Monetary Policy Report.

"We remain cautiously optimistic that per-person and per-worker economic conditions have begun to improve in Canada, as softer GDP readings are also a function of slowing population growth, and do not expect further interest rate reductions from the Bank of Canada. Softer recent momentum also, though, reinforces that a near-term pivot to interest rate increases won't be needed."

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