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"It would be a very bad thing for the United States to reinstate these large tariffs. So I think the market is saying that's not going to happen and moving higher based on anticipating something good coming out of some trade negotiations."

The S&P/TSX composite rose 37.68 points to 26,426.64. The Canadian market has benefited recently from strength in gold — a safe haven investors tend to flee to during rocky times — as well as energy and financials, Small said. 

In New York, the Dow Jones industrial average was up 214.16 points at 42,519.64. The S&P 500 index was up 34.43 points at 5,970.37, while the Nasdaq composite was up 156.34 points at 19,398.96.

"It's interesting that the market is shrugging off a lot of the noise coming out of Washington with respect to the increase in steel and aluminum tariffs," Small said. 

In March, Trump imposed 25 per cent tariffs on steel and aluminum imports to the United States. Trump announced his intention to double the duties at a steel plant on Friday.

Canada is the largest steel supplier to the United States, accounting for nearly 25 per cent of all imports in 2023. 

As Canadian officials were preparing for meetings in Washington on Tuesday, White House press secretary Karoline Leavitt said Trump would sign an executive order to increase the duties to 50 per cent.

U.S. markets are heavily swayed by moves in big tech stocks like Apple, Nvidia and Meta. And those stocks tend to in turn be driven largely by the latest tariff news. 

"Trade's ruling the day and the one sector that seems to be heavily affected is tech," Small said. 

"As long as the U.S. is talking to China, tech seems to be doing OK."

Small said it appears the global trade war is entering a new phase centred around negotiating deals, Small added. 

Investors, meanwhile, are becoming immune to the almost daily back-and-forth. 

"The president seems to come out swinging every time, swinging for the fences, asking for this, that and the other," Small said. 

"And then in the end he seems to pull back and it ends up being not as scary as initially thought."

North of the border, the Bank of Canada is set to announce its latest interest rate decision on Wednesday. Small said it's likely the central bank will hold off cutting rates until it can get a clearer picture of Canada's economic health, once second-quarter GDP numbers are in. 

"But I think it can go either way at this point." 

Statistics Canada is also set to release the May jobs report on Friday, and Small said that should provide a more current view of how well the Canadian economy is faring. 

The Canadian dollar closed at 72.87 cents US compared with 72.96 cents US on Monday.

The July crude oil contract was up 89 cents US at US$63.41 per barrel and the July natural gas contract was up three cents US at US$3.72 per mmBTU.

The August gold contract was down US$20.10 at US$3,377.10 an ounce and the July copper contract was down two cents US at US$4.83 a pound.

This report by °µÍø½ûÇø was first published June 3, 2025.

Companies in this story: (TSX: GSPTSE, TSX: CADUSD)