Why the TSX Fell August 31: Rate Bets Beat an Oil Rally
The S&P/TSX Composite closed August’s final session at 36,270.48, down 0.78%, its second straight decline. The trade that knocked Canada’s gold miners lower on Friday did it again on Monday, and this time the selling did not stop at the mining shares.
The miners fell again. The metal did not.
Gold was the worst sector at 1.67% lower and materials was next at 1.65%. Bullion went the other way, settling 0.65% higher at US$4,500.90.
That gap is the whole point. Bloomberg reported Monday that gold steadied after Friday’s tumble while Federal Reserve Chair Kevin Warsh’s Jackson Hole keynote spurred bets on a September rate hike. The miners were priced off that rate path, not off Monday’s metal print. We take apart what Warsh did and did not actually say, and what a widening Fed to Bank of Canada rate gap would mean, in Fed hike bets meet a Bank of Canada hold. It is the same repricing we covered in Friday’s recap, running a second day. Kinross fell 2.37% to $42.44, Barrick 2.17% to $62.16, Wheaton Precious Metals 2.05% to $208.89, Agnico Eagle 1.93% to $281.23 and Franco-Nevada 1.45% to $364.59.
Energy was the exception, and the reason was Hormuz
Energy rose 1.46% and was the only sector to gain more than half a point. Utilities added 0.35% and consumer staples finished flat.
CNBC reported that US forces struck Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday, citing CENTCOM, the first known US strikes on Iran since late July, and that oil rose on renewed worry about shipping through the strait. WTI crude settled 1.02% higher at US$85.96. Canadian Natural gained 1.98% to $69.49, Suncor 1.80% to $92.73 and Cenovus 1.39% to $44.52.
Unlike Friday, the decline was broad
On Friday the damage sat almost entirely in mining, and financials still finished green. Not on Monday. Financials fell 0.69%, with BMO down 1.25% to $236.24, Scotiabank 1.21% to $126.87, Manulife 1.29% to $58.79 and Great-West Lifeco 1.41% to $89.11. Technology lost 1.43%, and Shopify was the largest large-cap decliner at 3.92% lower to $204.27. Both railways fell, Canadian Pacific Kansas City 1.84% to $128.39 and Canadian National 1.20% to $173.05. Real estate lost 0.93%.
Baystreet.ca attributed the softer risk appetite to renewed Middle East hostilities and worsening US trade relations.
The US backdrop was milder. The S&P 500 lost 0.33% to 7,686.14 and the NASDAQ 0.12% to 26,370.89, both shallower declines than the TSX.
What drove it
COMMODITIES. Gold rose 0.65% to US$4,500.90 and WTI crude 1.02% to US$85.96. The gold sector still fell 1.67%, while energy gained 1.46%.
MOVERS. Shopify led the decliners, down 3.92% to $204.27, followed by Kinross and Barrick. Nutrien led the gainers, up 2.21% to $104.54, with Canadian Natural, Suncor and Cenovus the only other advances on the list.
BREADTH. Sixteen of the twenty large-cap movers fell and four rose. Friday’s list split evenly at nine and nine. This decline was general, not concentrated.
NEXT. The Bank of Canada decides Wednesday, September 2 at 9:45 am ET with the policy rate at 2.25%. Trade data lands Thursday and the August jobs report Friday.
What is ahead
The Bank of Canada announces its decision on Wednesday, September 2 at 9:45 am ET, per its 2026 schedule. The market is priced for a hold: one-month CORRA futures for the decision month settle at 2.275% against a 2.25% target, which is 0.26 basis points of change. The overnight rate has been 2.25% since October 30, 2025.
That sets up the divergence worth watching. Hike bets are rising south of the border, on the reporting above, while Canada is priced to stand still. The currency registers a widening policy gap first, and the Canadian dollar rose 0.32% to 0.7217 on Monday.
Statistics Canada follows with merchandise trade for July on Thursday, September 3 and the August Labour Force Survey on Friday, September 4, both at 8:30 am ET.
For anyone holding Canadian dividend payers, Monday mattered more than Friday did. A day when the banks, the lifecos and the rails all give back roughly a percent reaches far more portfolios than a day confined to the gold complex.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Market data is the August 31, 2026 close, from live market data pulled at the close. Sector figures use iShares TSX sector ETFs as proxies. Rate decision dates from the Bank of Canada’s published schedule; data release dates from Statistics Canada’s official release calendar.
