Canadian equities dropped to their lowest level in more than a month on Friday, as investors weighed robust domestic jobs data against a pullback in artificial intelligence (AI)-linked technology stocks. The S&P/TSX Composite Index (.GSPTSE) fell 0.6%, marking its weakest close since September 25, driven largely by a 3% decline in technology shares (.SPTTTK).

The benchmark is on track for a 2% weekly drop, its steepest decline since early October, despite a midweek bounce that delivered the biggest single-day gain in three weeks.

Domestic Jobs Data and Currency Impact

October’s employment report showed a stronger-than-expected rebound in jobs and a decline in the unemployment rate, highlighting underlying economic strength in Canada. The report also boosted the Canadian dollar (loonie).

While stronger employment data reflects a resilient economy, a firmer loonie may weigh on export-heavy sectors like energy and mining, which depend heavily on foreign demand.

Global Market Volatility and Tech Stock Pullback

Global markets experienced heightened volatility this week, as robust corporate earnings were unable to fully offset declines in AI-focused technology companies. Concerns over stretched valuations and profit-taking in high-growth sectors contributed to the market pullback.

Michael Constantino, CEO of Webull Canada, commented:

“The volatility is back … we’re still seeing clients put their money to work, but they’re more conservative.”

Government Budget and Policy Updates

Earlier this week, Prime Minister Mark Carney’s debut budget proposal failed to lift market sentiment. The plan, framed as a “generational investment” to strengthen the economy and address trade tensions with the U.S., drew criticism from analysts, who viewed it as a missed opportunity to tackle structural challenges.

Corporate News Highlights

Several Canadian companies reported key developments:

• Canadian National Railway (CNR.TO) announced a $700 million debt offering.
• Wheaton Precious Metals (WPM.TO) posted strong Q3 revenue, boosted by higher gold prices.
• Canadian Natural Resources (CNQ.TO) forecast a modest increase in 2026 production while reducing capital spending from current levels.
• Altus Group (AIF.TO) fell 13.9% after quarterly results missed analyst estimates.

Implications for Investors

The TSX’s recent drop reflects a mix of domestic economic strength, currency impacts, and global tech market volatility. Key takeaways for investors include:

1. AI and technology stock corrections can create temporary market pullbacks.
2. Firmer Canadian dollar may pressure export-heavy sectors such as energy and mining.
3. Corporate earnings remain strong, but valuations in high-growth sectors warrant caution.
4. Government policy and budget decisions can influence market sentiment, especially around trade and infrastructure investment.

Investors should monitor both domestic economic indicators and global tech trends to navigate ongoing market volatility.