Over November 10 and 11, the S&P/TSX Composite index fell and then mostly recovered. Higher-than-expected U.S. Inflation data and a hawkish Bank of Canada meeting summary pushed it down 275.81 points to 36,170.45 on Tuesday. On Wednesday, a rebound in energy, technology and base metals lifted it back to about 36,412. The Toronto Stock Exchange was open on Remembrance Day. Over the two days the index ended within about 35 points of Monday's close of roughly 36,446, but the swings showed how sensitive Canadian stocks have become to the outlook for interest rates.

Tuesday: U.S. Inflation and Rising Yields

The selling on November 10 started south of the border. The U.S. Bureau of Labor Statistics reported that its Consumer Price Index rose 0.4% in October after a 0.6% increase in September. Core prices, which exclude food and energy, rose 0.3% for a third month in a row. Energy prices climbed another 0.7%, and shelter costs rose 0.3%. The bureau did not publish a 12-month change, because October 2025 data were not collected during a U.S. government funding lapse.

Treasury yields rose after the report, and investors took profits following a strong run in equities. The TSX's losses were concentrated in basic materials. December gold fell US$84.30 to US$4,030.20 an ounce, and December crude slipped 81 cents to US$86.04 a barrel. Mining, consumer cyclical and technology stocks posted steep losses, while utilities attracted buyers.

Earnings also weighed on some stocks. Finning International (TSX:FTT) fell 6.4% to $89.08 after its third-quarter results. Revenue rose 7% and its equipment Backlog reached a record $4.1 billion, but Operating Margin slipped to 8% from 8.5%. The Canadian dollar eased to 70.52 U.S. cents. In New York, the S&P 500 fell 29.01 points to 7,520.93 and the Nasdaq Composite lost 187.26 points.

The Bank of Canada Signals More Hikes Are Possible

Also on Tuesday, the Bank of Canada published its summary of Governing Council deliberations for the October 28 decision, when it raised its policy rate by a quarter point to 2.5%. The summary showed that members weighed holding at 2.25%. The case for holding was that higher inflation was concentrated in energy and energy-heavy services, while core measures remained near 2%.

The case for raising won out. Gasoline, diesel and heating oil prices were well above July levels and expected to stay high, and Bank surveys suggested that businesses plan to pass more of their costs on to consumers over the next year. Members said there "could be a need to increase the policy rate further," and would decide one meeting at a time. The Bank expects CPI inflation to reach 3.5% by the end of 2026, stay above 3% for much of 2027 and return to 2% by mid-2028. It noted that the Unemployment rate is around 6.5%, so some slack remains in the economy. The next scheduled rate announcement is December 9.

Wednesday: Commodities Lead a Rebound

Sentiment improved on November 11. Gold, silver and copper rebounded early, and by late morning the index was up 250.19 points at 36,420.64, led by energy, technology and base metals. December crude rose US$1.94 to US$87.98 a barrel, while gold was little changed. U.S. markets also rose, with the Nasdaq Composite up more than 450 points in late-morning trading.

A closing report from Business Upturn put the index at 36,411.72, up 0.67%. TMX treats Remembrance Day as a banking holiday in its settlement calendar, so some trades placed around the day settle later than usual. The Canadian dollar eased again to about 70.24 U.S. cents.

Why Sector Mix Matters for the TSX

The two sessions showed why the TSX can behave differently from Wall Street. Energy, materials and financials make up a large share of the Canadian index, so oil and gold prices often matter as much as tech earnings. On November 10, a sharp drop in gold dragged on precious metals miners. Several of the day's biggest decliners, including NovaGold Resources, Americas Gold and Silver and Perpetua Resources, fell more than 7%. A day later, a recovery in crude and base metals did the opposite.

Higher rates create a tension for Canadian equities. Higher oil prices support energy producers such as Canadian Natural Resources (TSX:CNQ), which was among the most actively traded stocks on Tuesday. But oil is also the main reason the Bank of Canada has turned hawkish. Higher borrowing costs tend to weigh on rate-sensitive groups such as real estate, utilities and consumer discretionary stocks. Even after Tuesday's drop, the index was still up about 2.7% for the quarter.

Risks for Canadian Stocks

Several risks are on the calendar. More U.S. inflation data could push the U.S. Federal Reserve and the Bank of Canada towards further tightening. The Middle East conflict that is restricting oil Supply could ease or escalate, and either outcome would move energy stocks and inflation expectations. Canada-U.S. trade talks remain unresolved. Prime Minister Mark Carney said this week that the Trump administration is still Canada's main negotiating partner despite the Democrats' midterm gains.

Earnings season is also continuing. CGI, CAE, Power Corporation of Canada, Franco-Nevada and Cargojet were among the companies scheduled to report on November 11. Because gold miners make up a large share of the index, swings in bullion prices around the US$4,000 mark could keep adding volatility.

Conclusion

The TSX's drop and recovery over November 10 and 11 left the index close to where it started the week, but the reasons for the moves were clear. Hot U.S. inflation data and a Bank of Canada that is openly considering more rate increases weighed on stocks, while recovering Commodity prices supported them. Until inflation slows or oil prices fall, Canadian equities are likely to keep reacting strongly to each new data release, with the Bank of Canada's December 9 decision the next major event.