The Toronto Stock Exchange rose on Tuesday as a jump in energy issues and gains across most sectors outweighed weakness in mining stocks, while stronger-than-expected Canadian trade data offered a positive signal for second-quarter economic growth.
The S&P/TSX Composite Index closed up 60.27 points, or 0.17%, to 35,272.59, with a majority of sectors closing higher.
Energy led gainers, up 3.03%, with Health Care, Industrials, Information and Technology, Financial, Utilities, and Telecom, up 0.17%, 0.59%, 0.88%, 0.35%, 0.68%, and 1.45%, respectively. Battery Metals Index closed down 1.73%, while Base Metals ended the day down 4.38%.
In commodities, gold traded lower on Tuesday as the dollar and bond yields rose, with the metal remaining rangebound even as inflation worries eased with lower energy prices. The precious metal for August delivery was last seen down $9.70, or 0.2%, to $4,157.80 per ounce.
Meanwhile, West Texas Intermediate (WTI) crude oil jumped on Tuesday following fresh Iranian attacks on ships moving through the Strait of Hormuz. WTI crude oil for August delivery closed up 2.8% to settle at $70.44 per barrel, while September Brent oil was last seen up 3.1% to $74.25.
The rise follows reports that Iran fired on ships in Omani waters near the Strait of Hormuz. The attacks threaten to keep ships that have been trapped in the Persian Gulf since the Feb. 28 start of the war on Iran from leaving the region.
On the domestic economic front, stronger-than-expected trade data offered a positive signal for second-quarter growth, with Canada's merchandise trade surplus widening in May and economists pointing to a growing contribution from net exports.
With merchandise data covering the first two months of the quarter, Canada's trade activity suggests net exports are shifting from a drag in the first quarter to a modest tailwind for real GDP growth in Q2, said TD Economics on Tuesday.
May's trade surplus widened to C$4.2 billion, up from an upwardly revised C$3.4 billion in April, said Statistics Canada on Tuesday. May's surplus was significantly above the C$2.9 billion consensus figure provided by Bank of Montreal Capital Markets (BMO) before the StatsCan release.
Exports increased 0.9% monthly, led by stronger shipments of metal ores and non-metallic minerals, including diamonds, while energy exports eased slightly after recent gains.
"Net exports look to add firmly to growth in Q2, another data point that suggests the Canadian economy has snapped out of its two-quarter funk," wrote BMO Senior Economist Robert Kavcic in a note.
Canada's merchandise trade surplus with the U.S. widened to C$11.6 billion in May from C$10.3 billion in April, posting the largest surplus since January 2025, according to StatsCan.
Notably, the July 1 U.S.-Mexico-Canada Agreement (USMCA) deadline passed without renewal, moving the agreement into rolling annual reviews and extending uncertainty around unresolved issues involving steel, aluminum, autos, lumber, and procurement, added TD.
"This leaves risks modestly tilted to the downside even as solid U.S. demand offers a partial offset," wrote TD Economist Marc Ercolao.
In currency markets, the Canadian dollar remained under scrutiny as investors weighed improving domestic economic data against weaker commodity prices and ongoing trade uncertainty.
The Canadian dollar is caught between improving domestic data and limited external support, but conditions might be in place late this year to provide support to the loonie in 2027, National Bank of Canada said in a note.
Recent gross domestic product gains and stronger full-time employment have eased recession concerns, with Q2 growth tracking around 2.3% annualized, the bank said. However, weaker medium-term growth prospects, softer commodity prices, and the uncertainty on the ongoing USMCA trade discussions continue to limit the Canadian dollar's upside, Stefane Marion and Kyle Dahms said in the bank's note.
The Canadian dollar's stretched levels after climbing above C$1.42 against its US counterpart don't seem to be enticing investors to a near-term rebound with labor-market data on Friday offering economic clues, according to Societe Generale.
Since the pair last traded at these levels following the April 2025 tariff shock from President Donald Trump, expectations for higher U.S. interest rates have widened the gap between Canadian and U.S. short-term yields, continuing to support the US dollar, the bank said in a note Tuesday.