Technology Stocks Lead Market Decline as Microsoft's Cloud Growth Slows

Canadian equities reversed course Thursday morning, with the S&P/TSX Composite Index turning sharply lower as technology stocks bore the brunt of selling pressure. The benchmark initially surged to 33,427.86 before surrendering gains and sliding to 32,698.14, eventually settling at 32,890.82—a loss of 285.25 points or 0.86%. The selloff in the technology sector was particularly pronounced, with the Information Technology Capped Index plummeting 5.35%.

The decline stemmed from disappointing guidance issued by Microsoft regarding its cloud computing division. The tech giant’s second-quarter results revealed slowing cloud computing growth and delivered underwhelming third-quarter operating margin projections, rattling investor confidence across the entire technology sector. This triggered a cascade of losses among Canadian tech-focused companies trading in lockstep with their U.S. counterparts.

Tech Giants and Mid-Caps Hit Hardest

The technology sector’s weakness was evident in individual stock performance. Celestica emerged as the biggest casualty, tanking more than 15% in heavy selling. Dye & Durham cratered 10%, while Sylogist declined 9.5% and Coveo Solutions retreated 7.4%. Secondary tech holdings also suffered material losses, with Bitfarms, Lightspeed Commerce, Descartes Systems, Open Text Corporation, Constellation Software, Computer Modelling Group, Firan Technology Group, Blackberry, Tecys and Kinaxis each falling between 2.5% and 6%.

The broad-based technology decline underscores how concentrated exposure to cloud infrastructure themes remains, with investors reassessing valuations across companies with significant revenue exposure to enterprise computing services.

Materials Sector Reverses on Precious Metal Weakness

The materials sector also retreated sharply as precious metal prices tumbled from their elevated levels. Vizsla Silver Corp took a beating, dropping nearly 16%, while Lithium Americas Corp fell 11% and G Mining Ventures declined 10%. Additional significant losers in the sector included Orla Mining, Aya Gold & Silver, Perpetua Resources Corp., Discovery Silver Corp., Equinox Gold Corp., Iamgold, Silvercorp Metals, Aris Gold Corporation and B2Gold Corp.

The synchronized weakness in precious metals suggests profit-taking after sustained strength and signals shifting market sentiment toward commodity-linked assets amid broader economic uncertainty.

Divergent Trends: Healthcare Mixed, Energy Resilient

Healthcare stocks displayed mixed performance. Sienna Senior Living and Curaleaf Holdings lost 1.2% and 5% respectively, while Bausch Health Companies drifted down nearly 1%. The sector’s inability to gain traction reflected the broader defensive market environment.

In contrast, energy equities found meaningful support, with Athabasca Oil Corp., Prairiesky Realty, Baytex Energy, Tamarack Valley Energy, Canadian Natural Resources, International Petroleum Corp., Freehold Royalties and Enerflex all advancing between 1.3% and 3%. The sector’s resilience provided a counterpoint to weakness elsewhere and suggests selective interest in commodity price exposure.

Trade Deficit Widens on Export Contraction

Recent data from Statistics Canada added context to the market turbulence, showing Canada’s trade deficit expanded significantly to C$2.20 billion in November 2025 from C$0.395 billion in October. The deterioration reflected a 2.8% month-on-month decline in exports to C$63.94 billion, while imports edged marginally lower by 0.1% to C$66.14 billion.

This widening deficit environment provides a macroeconomic backdrop to equity market volatility and suggests ongoing challenges to Canadian economic momentum, reinforcing investor caution toward technology and commodity-related equities.