The Toronto Stock Exchange rose on Wednesday as gains in financial and battery metals shares outweighed weakness in technology and base metals, while investors assessed the Bank of Canada's decision to leave interest rates unchanged and mixed domestic economic data.
The S&P/TSX Composite Index closed up 95.66 points, or 0.27%, to 35,416.20, with mixed sectors.
Battery Metals Index led gainers, up 4.54%, with Health Care, Industrials, Telecom, and Financial, up 0.08%, 0.27%, 1.28%, and 1.57%, respectively. Base Metals led decliners, down 1.83%, while Information and Technology, down 1.77%, Utilities, down 0.05%, and Energy, down 0.45%.
In commodities, gold edged lower on Wednesday even as the dollar and treasury yields fell after the US reported an unexpected drop in wholesale price inflation last month. The precious metal for August delivery was last seen down 0.5% to $4,049.80 per ounce.
Earlier, the US Bureau of Labor Statistics reported the Producer Price Index fell by 0.3% monthly in June, down from a rise of 0.6% in May and under expectations for a flat reading, according to MarketWatch.
Meanwhile, West Texas Intermediate (WTI) crude oil rose to a one-month high on Wednesday as fighting between the US and Iran intensified, keeping the Strait of Hormuz blocked. WTI crude oil for August delivery closed up $0.26, or 0.3%, to settle at $79.71 per barrel, the highest since June 15, while September Brent oil was last seen down $7.70, or 0.2%, to $84.71.
Investors also weighed the Bank of Canada's decision to hold rates steady and its outlook for inflation and economic growth. The BoC left its policy rate unchanged on Wednesday, in line with expectations, maintaining a cautious approach as policymakers assessed a mixed economic outlook and easing inflation pressures.
This was the sixth policy meeting in which Canada's central bank held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The BoC's message is that it can remain patient, allowing time to assess incoming economic data before making any further policy adjustments, but stressing it can either cut or hike rates as the situation requires.
"Governing Council judges the current policy rate remains appropriate to sustain the economic recovery and bring inflation back to the 2% target," the BoC wrote in its policy statement, adding it's "prepared to adjust monetary policy as needed".
Governor Tiff Macklem said the key messages were that Canada's growth has resumed after a year of stagnation, supported by resilient consumers and adaptable businesses despite US trade pressures. He added the central bank's base case is that inflation will gradually ease, but it is ready to hike rates if high energy prices pass through to other sectors.
The BoC is "ready" to hike rates, even in consecutive moves, if the inflation situation requires it, the governor said in a press conference.
Economists predict the central bank will remain on hold through the rest of 2026.
"It doesn't seem like the Bank is in any rush whatsoever to move off the sidelines, even if their rhetoric leans slightly hawkish," wrote Bank of Montreal Capital Markets Chief Economist Douglas Porter. "The Bank's tone around the economic outlook was a tad more upbeat, with plenty of suggestions that growth was turning the corner."
The BoC's "message remains one of patience," wrote TD Economics' Maria Solovieva, adding she continues to see the central bank on hold this year. The BoC's statement suggests growing confidence in the economy, adding that the Governing Council will continue to assess its "strength" when considering future rate decisions. While this suggests the recovery is gaining traction, it doesn't signal imminent rate hikes, with economic slack remaining substantial.
Additionally, Canadian manufacturing sales rose 1.3% month over month in May to a record C$78.1 billion, marking a fourth straight monthly gain, Statistics Canada said on Wednesday.
Sales rose in 14 of 21 subsectors, led by monthly gains in transportation equipment, which was up 4.1% and chemicals, gaining 4.6%, according to Statistics Canada. The largest decline was in electrical equipment, appliances and components, which fell 5.8% on the month.
However, Canadian wholesale sales were flat in May at C$90.0 billion after a 1.4% gain in April, with declines in four of seven subsectors, according to StatsCan. The largest declines came from food, beverage and tobacco as well as personal and household goods, which were partly offset by a jump in non-agricultural chemical and allied product sales, the Ottawa-based agency added.