Last week the S&P/TSX Composite fell 350 points to 30,108, while U.S. benchmarks rose, as December gold futures slipped US$91 to US$4,213. The Canadian Press report attributed the split to sector mix. The same week, spot gold printed fresh records above US$4,300, then faded into the close. That reversal amplified intraday pressure on Canadian miners and may on baystreet were wondering how this dichotomy can be.
Pinpoint Index Exposures
S&P Dow Jones Indices structures the, which remains tilted to resource producers and financials, so materials swings carry outsized index impact. A sharp gold giveback after record highs often hits operating leverage names first, then flows spill into baskets and futures.
Meanwhile, the S&P 500’s larger tech weight benefits more directly from lower discount rates and momentum factors. These composition differences explain why identical macro headlines can drive opposite daily outcomes across Canada and the United States.
Policy also shaped the tape. The Bank of Canada cut on September 17, 2025, signalling caution as growth softened. As Governor Tiff Macklem stated in his opening remarks, “Today, we lowered the policy interest rate by 25 basis points, bringing it to 2.5%.” That move reduces domestic yields and supports duration assets, but the TSX’s resource tilt dilutes the effect relative to a tech heavy index.
The Federal Reserve also eased on September 17, 2025, with language supportive of risk assets. In its statement, the Fed wrote, “the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4-1/4 percent.” That decision compresses discount rates for long duration U.S. equities, reinforcing relative strength in megacap tech during days when commodities slip. [Federal Reserve FOMC statement].
Mechanically, the October 17 divergence looks like a textbook factor rotation day. First, gold retreated after setting records earlier in the week, which pressured miners and the broader Canadian materials complex. Then, U.S. indices gained, as lower policy rates and resilient earnings guidance buoyed growth multiples.
Finally, cross border ETF flows likely amplified both moves, since passive baskets replicate the same sector skews defined by the index providers. The setup does not require a change in trend, it reflects how composition and rate sensitivity dictate which market absorbs the shock.
Sustained divergence would require persistence in three drivers, sector specific commodity volatility, differing index exposures, and a policy path that favours long duration U.S. equities. Index committees control the baskets, central banks control the rates, and miners’ cash costs and hedges control the earnings sensitivity.
