Canada Posts 14th Consecutive Quarterly Current Account Shortfall

Canada's S&P/TSX Composite Index hovered around record high at 34,130 amrk on Thursday as strong financial sector earnings offset widespread weakness in energy and mining shares. The market reacted to fourth quarter results where TD Bank rose 0.9% and CIBC jumped 2.9% after both institutions exceeded profit expectations. However, mega-cap RBC lost nearly 2%. as concerns over rising credit costs and a potential peak in net interest margins overshadowed a record quarterly profit. Meanwhile, the energy sector lagged after Suncor fell 0.9% and Canadian Natural Resources dropped 1.1% due to sliding crude prices. Mining stocks also faced headwinds as Barrick Gold slipped 1% and Teck Resources retreated 2%. Meanwhile tech shares provided a tailwind as Shopify gained 1.6% following Nvidia's positive revenue outlook. In the industrial space Gildan Activewear plummeted over 5% and CCL Industries fell 1.2% following disappointing revenue data.

Futures tracking the S&P/TSX Composite index were muted on Thursday as robust earnings from major banks offset weakness for oil producers. Both RBC and TD Bank beat their profit estimates in the fourth quarter, while CIBC posted a 47% jump in annual profits. In contrast, energy stocks were pressured by falling oil quotes with Iran's pledge to show flexibility in nuclear talks and OPEC+'s potential output increase. Meanwhile, gold edged up, offering slight support to miners. After-hours in the prior session, CCL Industries missed Q4 revenue estimates, while Stantec beat profit forecasts. In other news, Nvidia's upbeat Q1 revenue outlook gives support to North American tech shares, including Shopify.

Canada's current account deficit narrowed by C$4.6 billion to C$0.7 billion in Q4 2025, marking the 14th consecutive quarter of deficits. The goods and services trade balance posted a C$3.1 billion deficit, improving C$4.4 billion from Q3. The goods trade deficit narrowed C$5.0 billion to C$4.5 billion, while the services surplus contracted from C$2.0 billion to C$1.4 billion. Exports of goods increased 3.9% to C$195.1 billion in the fourth quarter, led by higher exports of metal products (23.4%), mostly gold. Exports of energy products (1.6%) and aircraft (5.8%) also rose in the fourth quarter. Likewise, services exports rose 0.5% to C$60.9 billion as gains in transportation services (5.5%) and commercial services (0.7%) were partially offset by lower exports of travel services (-1.3%), largely due to lower education-related travel services exports. Meanwhile, services imports were up 1.5% to $59.5 billion in the fourth quarter.