Scotiabank closed seven percent higher at $128.73 after posting $2,953m in third-quarter profit
The S&P/TSX composite index closed 243.51 points higher at 36,957.63 on Tuesday, lifted by financials and basic materials.
Canadian bank earnings season supplied much of the push, The Canadian Press reported, with Scotiabank shares ending seven percent higher at $128.73.
Ashish Utarid, assistant vice-president of investment strategy at IG Wealth Management, said Canada is not ignoring the trade news, but "the TSX is reminding us that sector mix still matters."
The index leans on financials and materials, which leaves it with less direct tariff exposure, he told The Canadian Press.
Scotiabank reported third-quarter net income of $2,953m against $2,527m a year earlier, according to the bank's release, with diluted earnings per share of $2.27 and adjusted diluted EPS of $2.28.
Adjusted return on equity reached 14.2 percent from 12.4 percent, clearing the bank's medium-term target.
Reuters noted the bank hit that goal a year ahead of the 2027 schedule it had set, and reported that income at the global banking and markets unit grew 37 percent on record underwriting and advisory fees.
"Q3 was a record quarter for the Bank, as all business lines reported strong results and we exceeded our medium-term objectives in the period," said Scott Thomson, president and CEO of Scotiabank, in the bank's release.
BMO reported adjusted earnings of $3.96 per share against an estimate of $3.76, Reuters reported, citing LSEG data.
Adjusted net income at BMO's capital markets segment rose 45 percent in the quarter ended July 31, its US banking business gained 11 percent, and Canadian personal and commercial banking grew 15 percent.
BMO executives cast the trade conflict as an opening for governments to move on internal trade, taxes, and infrastructure, perThe Canadian Press.
Philip Petursson, chief investment strategist at IG Wealth Management, told Reuters that reserve releases are the next earnings lever.
He said banks can move loan loss provisions from recent years back into the income statement if delinquencies and loan losses run better than expected.
That is his expectation for the remainder of the year and into 2027.
Ottawa confirmed dollar-for-dollar retaliatory tariffs on American goods Tuesday, set to take effect September 8, The Canadian Press reported.
The measures answer the 50 percent US levies Trump imposed over the weekend.
Prime Minister Mark Carney told reporters in Ottawa that "Canada will match Washington's new tariffs dollar for dollar" to protect workers, farmers, families, and businesses.
The response will target US steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics, according to Al Jazeera.
Canadian Trade Minister Dominic LeBlanc cited by CNBC said the response was not the preferred path.
"Our preference was to find a deal that benefits both countries. We still believe that's possible. But in the meantime, we're not waiting by the phone," he said.
Bank analysts have downgraded the disruption to background noise.
"Businesses and banks have figured out a way to manage these (trade tensions) as normal course bumps rather than major hurdles," Shalabh Garg, analyst at Veritas Investment Research, told Reuters.
South of the border, the Dow Jones Industrial Average added 160.24 points to 53,577.40 for a third straight winning session, the S&P 500 gained 24.42 points to 7,677.28, and the Nasdaq Composite rose 171.11 points to 26,151.30, per CNBC.
The benchmark 10-year US Treasury note yield fell more than seven basis points to 4.625 percent, extending a retreat that began after CNBC reported the US Treasury Department could tap its US$1tn General Account to fund bond repurchases.
Semiconductors carried the session ahead of Nvidia's results, due after Wednesday's close.
Nvidia rose 2.2 percent, Advanced Micro Devices added 4.9 percent after a Raymond James upgrade, and Micron gained 2.5 percent, Reuters reported, with the broader chips index closing 1.4 percent higher.
"When you are the trade, execution stops being a catalyst and becomes a prerequisite," said Mark Malek, chief investment officer at Siebert Financial, quoted by Reuters on the pressure Nvidia carries into the print.
Consumer names dragged.
The Conference Board's Consumer Confidence Index slipped to 89.4, down 0.8 points and short of the Dow Jones consensus of 90.2, according to CNBC, a seven-month low on Reuters' reading.
Dick's Sporting Goods plunged 30.7 percent, its worst day on record, after cutting annual forecasts.
Target fell 3.8 percent and Walmart lost 1 percent.
Bret Kenwell, eToro US investment analyst, drew a line between mood and money in comments to CNBC.
"Markets can look past a bad mood. They can't look past a consumer who actually stops spending," he said.
Money market participants are pricing in one 25-basis-point rate increase by the end of the year, Reuters reported, citing LSEG data.
US Federal Reserve Chair Kevin Warsh speaks Friday at the Fed's Jackson Hole symposium in Wyoming.
The October crude oil contract fell US$2.65 to US$82.36 per barrel.
"Generally speaking, we're confident that oil will remain in this kind of range," Utarid told The Canadian Press. "We don't see it dipping below US$75 from our house view."
The Canadian dollar traded for 72.26 cents US against 72.24 cents US on Monday, and the December gold contract fell US$3.30 to US$4,694.50 an ounce.
