TSX Edges Lower as Investors Eye Fed Decision and Corporate Earnings

Canada's main stock index edged lower on Tuesday, pulling back from a record high set in the previous session, as investors adopted a cautious stance ahead of a busy week of market-moving events.

A Cautious Session

The benchmark S&P/TSX Composite index fell by 0.45% to close at 35,394.43 on Tuesday, according to Investing.com data. The move came as traders assessed ongoing geopolitical discussions in the Middle East and prepared for a wave of corporate earnings reports.

Several major Canadian companies are scheduled to release quarterly results this week, including:

• Agnico Eagle Mines (TSX:AEM)
• Magna International (TSX:MG)
• Enbridge Inc (TSX:ENB)

Fed Decision and U.S. Markets in Focus

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Investor attention was heavily focused on the U.S. Federal Reserve, which began its two-day monetary policy meeting on Tuesday. While markets broadly expect the central bank to hold interest rates steady, traders are pricing in an 80% probability of a rate hike in September, according to the CME FedWatch tool. The Fed's decision and subsequent commentary will be closely watched for signals on future policy direction.

U.S. stock markets opened mixed, with weakness in technology shares weighing on sentiment. The tech-heavy Nasdaq Composite fell 0.6% in early trading, pressured by a sell-off in semiconductor stocks amid concerns over emerging competition from Chinese chipmakers. Major U.S. tech earnings from Microsoft, Apple, and Amazon are also due later this week, providing further insight into the health of the sector.

Commodities and Currencies

In commodity markets, oil prices fell as the U.S. and Iran continued diplomatic talks, easing some geopolitical risk premium. Gold prices also declined, with spot gold dropping 1.3% to $4,023.38 an ounce. The U.S. dollar index, which measures the greenback against a basket of currencies, held near a one-month high, creating headwinds for the non-yielding precious metal.