04:20 PM EDT, 03/18/2025 (MT Newswires) -- The Toronto Stock Exchange closed down for the first session in three on Tuesday as Canadian inflation turned sharply higher last month, but losses were capped as some investors await further clarity on a brewing trade war between Canada and the United States, while others seek a safe haven in precious metals, sending gold to record high levels.

The S&P/TSX Composite Index closed down 79.04 points to 24,706.07. Among sectors, Information Technology, down 1.87%) the biggest decliner, with Health Care the sole gainer, up 0.45%.

In terms of stock specific news, many stock pickers here await the release after trade today of third quarter earnings from Canadian convenience store operator Alimentation Couche-Tard ( ANCTF ) , which said only last week it will keep up "friendly and persistent" attempts to complete a deal and acquire Japan's retail giant Seven & i Holdings, the owner of the 7-Eleven convenience-store chain.

Data released earlier Tuesday showed Canada's inflation jumped higher in February. This was partially due to the end of the GST sales tax holiday. Headline CPI gained by 0.7% month over month and by 2.6% year over year, with food prices a significant driver. Trim and median CPI figures, which are calculated on an after tax basis, also accelerated, with the average at up 0.3% MoM and up 2.9% annualized.

David Doyle, head of economics at Macquarie, said the rise in inflation was at least partially anticipated by Bank of Canada. Last week the BoC suggested headline CPI would rise to about 2.5% year over year in March. According to Doyle, today's figures suggest the potential for upside risks to this when data are released next month. But Doyle said this is likely to be more than offset by the elimination of consumer carbon tax in April and this could lead to a drop of 0.5 ppts or more in year-over-year CPI on the month. "Retaliatory tariffs may offset some of this drag," he added.

Doyle said should strong underlying inflation data persist for March, it may nonetheless lead the BoC to temporarily pause the rate cutting cycle. However, Macquarie suspects that trade policy uncertainty and struggles in housing and the labor market are likely to lead the BoC to look through a temporary rise in inflation. As a result, Macquarie continues to anticipate three 25 bps ahead in each of April, June, and July with the overnight rate reaching 2.0%.

Still, Scotiabank noted Canada is particularly vulnerable to the resulting economic uncertainty and disruptions brought on by the trade dispute with its North American neighbor. Scotia said tariffs implemented so far were "largely in line" with its holding assumptions since December, but additional broad-based tariffs U.S. President Donald Trump is promising to impose April 2, in violation of CUSMA, "could necessitate a significant downward revision to our forecast of Canadian GDP growth".

For its part, Scotia sees the BoC and the Federal Reserve as likely to be on hold for several months as they too await to see how the tariff war unfolds, and how governments, particularly Canada's, support firms and households through a challenging period.

Of commodities today, West Texas Intermediate closed with a loss as talks between U.S. President Donald Trump and Russia's Vladimir Putin for a Ukraine ceasefire offset rising tensions in the Middle East after Israel broke its Gaza ceasefire with the Hamas militant group by launching strikes that left hundreds dead. WTI crude oil closed down $0.68 to settle at US$66.90 per barrel, the highest since February 28, while May Brent crude was down $0.51 to US$70.56.

But gold traded at a fresh record high late afternoon on Tuesday, firming above the US$3,000 mark as renewed violence in the Middle East prompts yet more safe-haven buying. Gold for April delivery was last seen up $37.70 to US$3,043.80 per ounce, the third-straight day the precious metal has traded above $3,000.

Staying on precious metals, Rosenberg Research published a note saying platinum, palladium, and rhodium each face a "complex supply picture," suggesting different time horizons for potential trades.

Rosenberg Research noted precious metals remain in the spotlight, but it said with gold and silver receiving the bulk of investor focus, it delved deeper into the outlook for some of the lesser-known names (palladium, platinum, and rhodium, for example). It added: "Return drivers for this group are different from the other precious metals, but a supply deficit combined with increasing jewelry demand and varied industrial uses (autos and green hydrogen, to name a few) mean enough tailwinds are on the horizon, especially for platinum (long-term) and rhodium (near-term)."

Rosenberg Research said precious metals have long been one of its favored calls, with both gold and silver rallying roughly 55% apiece over the past two years. It continues to hold a bullish view as the outlook "remains bright". But with investor interest on the rise, Rosenberg Research has decided to delve deeper into the precious metals group, expanding beyond the traditional areas to those such as platinum, palladium, and rhodium (otherwise known as the platinum group metals or PGM). "As we assess the supply-demand backdrop of the group, we see relatively more favorable dynamics for platinum (from a longer-term perspective) followed by rhodium (tactical near-term trade), while an expected surplus in palladium supply may mean headwinds to prices."

But the research also noted: the PGM group is thinly traded thanks to a small supply base, mostly in Russia and South Africa, impacted by country-specific issues, leading to more volatile prices compared to gold and silver. "This is something to keep in mind while investing in these metals," the research added.