Cautious Start in Toronto: Tech Softens, Materials Steady as Markets Count Down to Jackson Hole

 

Toronto began Thursday in a holding pattern. The S&P/TSX composite opened marginally lower, a small but telling move that captured the market’s priorities: reduce risk at the edges and wait for guidance from Jackson Hole. With the Fed’s annual retreat underway and Chair Jerome Powell due to speak, Canadian traders opted to keep powder dry rather than chase a tape with few near-term catalysts.
The early narrative belonged to technology. Recent leadership names eased, echoing the wobble seen in U.S. growth stocks as investors debate how aggressive to be on AI-driven winners before hearing the central bank’s take on the economy. The step back in tech gave the index a slight downdraft, though it wasn’t one-way traffic. Materials shares provided a measure of balance, helped by firmer precious metals and a constructive tone around industrial metals. In a market built on resources, that ballast matters—especially on days when higher-duration assets lose a bit of altitude.
Energy carved out a middle ground. Crude’s underlying demand picture has improved, but headline risk and the dollar’s firmness kept rallies in check. Bank stocks drifted sideways, a nod to the cross-currents facing the sector: the allure of eventual policy easing versus the near-term reality of elevated funding costs and a slower credit impulse. With valuation support present but not compelling, most investors chose to rotate within positions rather than add net exposure.
Incoming data added nuance without changing the plot. Weekly U.S. jobless claims moved higher, consistent with a labor market that is cooling—slowly—after a long stretch of resilience. In Canada, a surprise uptick in producer prices complicated the clean “cuts-soon” storyline that had gathered steam after softer consumer inflation. The combination leaves policymakers threading a needle: acknowledging progress on inflation while not declaring victory prematurely, all under the cloud of tariff-related uncertainty that could still push prices around.
That policy ambiguity showed up in positioning. Derivatives still point to decent odds of a Fed cut in September, but the conviction is weaker than it was earlier in the summer. In practical terms, that means the TSX traded in narrow ranges with pockets of sharp single-name moves, particularly in higher-beta tech and the more thinly traded corners of mining. When headlines hit—about rates, about commodities, about global trade—prices moved quickly, and then just as quickly settled back into the day’s wait-and-see rhythm.
If there was a through line, it was discipline. Portfolio managers spoke of favoring balance sheets that can fund growth internally and businesses with pricing power—attributes that cushion against a scenario where money stays expensive longer than hoped. That doesn’t preclude upside: a dovish tilt from Powell could brighten the outlook for rate-sensitive financials and growth stories alike. But until that signal comes, Thursday’s gentle pullback looked less like a verdict and more like a timeout.
In short, Toronto’s tone matched the global one: restrained, selective, and laser-focused on policy. The materials bid hints at where confidence still lies; the tech dip shows where it is most fragile. Jackson Hole will decide which side gets the upper hand next.