The Toronto Stock Exchange is up 67 points at midday in choppy trade, boosted by a tech sector that is up 5%.
Sentiment is also higher on renewed hopes for a Middle East deal, with U.S. President Trump saying the U.S. blockade on the Strait of Hormuz will be lifted.
Energy and utilities are the biggest decliners, down 1.3% and 1.2%, respectively.
The focus was on the release of Canadian GDP data this morning, which TD Economics described as a "a disappointing report." According to TD, the surge in first quarter imports was expected to drag on growth, but with residential investment, government spending and non-residential structures investment all posting contractions, there was no room for growth. But, TD said, the wedge between the industry and expenditure measures of GDP, together with the strong flash estimate for April, suggest that growth should bounce back in the second quarter.
"The disappointing first quarter figure likely overstates the weakness in the economy as net trade remains noisy and materially subtracted from first quarter growth. Domestic demand growth posted a small contraction but has vacillated between growth and small contractions since late 2024. Looking to Q2, some bounce-back should be expected. Nonetheless, the Canadian economy continues to operate well below capacity, posting a contraction in Q4 and no growth in Q1, flirting with a technical recession. This suggests that ample slack remains, providing some offset to the inflationary forces coming from the energy shock. Our view remains that as the economy continues to operate below capacity, and if the inflation shock fades, the Bank of Canada will remain on the sidelines."
CIBC said overall this was a "very weak report from most angles" that shows trade uncertainty and tariffs are continuing to hold back growth, while consumers have little ammunition left for spending ahead, and interest-sensitive sectors are lagging. The report missed the BoC's MPR projection for 1.5% growth. But CIBC said the positive momentum implied by the April reading, seeing a 0.4% month over month increase, will still leave policymakers on hold, with growth in Q2 likely to receive a lift as government investment normalizes. "Our base case also assumes progress towards reducing some tariffs (namely aluminum and possibly steel) in the coming months, and if the oil price shock starts to fade over that period as well, GDP will return to sustainable growth for the rest of the year," it added.