TSX Closer: The Index Rises For a Second Straight Day, Back To Within 100 Points of Its Record Close
The Toronto Stock Exchange was up for a second-straight session Friday, even with commodity prices and sectors mixed, as today's Canadian GDP data was seen "further extending the hike runway" while talk of Canada being in a recession was played down.The S&P/TSX Composite Index closed up 240.87, points or 0.7%, to 34,758.57, adding to the 105 points gained Thursday, on some relief that interest rates are unlikely to be lifted soon, which would increase borrowing costs for many companies. This leaves the index within a 100 points of Monday's record close of 34,830.Among sectors, Energy was down 1.15%, the only one to fall by more than 1%, with oil prices weaker. Info Tech gained near 4.7% and the Battery Metals Index was up by 3.7%.Base Metals was up 0.4%, helped by a higher gold price, as Rosenberg Research published 'Gold Miners: A Tactical Opening After the Pullback?' in which it said gold's pullback has "de-rated the miners, creating a high-beta tactical opportunity if macro headwinds start to fade."Among key takeaways, Rosenberg Senior Markets Strategist Mehmet Beceren said gold's pullback looks more like a short-term macro unwinding as the structural story remains intact. Higher oil prices, a firmer U.S. dollar, and rising bond yields have pressured bullion, but central bank demand, fiscal risk, and geopolitical fragmentation remain intact, he noted.Beceren said gold miners may now offer a tactical high-beta entry point. The stocks have de-rated alongside spot gold, yet earnings power remains strong with bullion still above $4,000 per ounce; any easing in the U.S. dollar, yields, and energy-cost pressures could revive margins and multiples, he added.On the economics front, earlier Friday Canadian GDP came in sharply below expectations for the first quarter, edging down 0.1% on an annualized rate to mark a second consecutive quarterly decline following a revised 1% ) drop in Q4, down from the originally reported drop of 0.6%. Well below, as RBC Assistant Chief Economist Nathan Janzen noted, preliminary estimates of monthly output through March released a month ago that were pointing to growth closer to a 2% rate in Q1.Although the Q1 GDP decline is very small, two consecutive quarters of GDP decline are "historically unusual", Janzen said. But underlying details, for a second consecutive quarter, look firmer than what would be typically expected at, say, the beginning of a recession, he added.The data will still likely put more focus on the May labor market data in the week ahead, Janzen said, noting employment numbers have also softened in recent months, and the unemployment rate increased into April. "But we continue to think underlying details in both the labor market and GDP data are better than headline growth number suggest," he added.Janzen said Canada's economic outlook remains contingent on U.S. international trade policy remaining broadly stable and the oil price shock continues to cut into household purchasing power. But he looks for the unemployment rate to drift gradually lower this year and for per-capita GDP growth to continue to broadly improve.Separately, Simon Deeley and Jason Daw at RBC Dominion Securities in a 'Canada Rates Strategy' note said Bank of Canada hike pricing is being reduced and pushed further out. This is the logical move following weaker recent results from the three key macro metrics: labor market, inflation and output, they added. Today's softer GDP result and "ever so slightly resulting in a technical recession", is at odds with where monthly GDP figures were indicating prior to the data, the duo noted. "We saw some discrepancy between lackluster labour market performance in Q1 (unemployment rate remaining sticky high, hours worked flat) and the GDP tracking, but today's GDP result reduces that considerably," they said.According to Deeley and Daw, they had discussed the extending runway for hikes following the softer April inflation data and today's data reinforces that view. The BoC flagged risk scenarios to both cuts and hikes at the April meeting, though more convincing on the hike side, but their overarching message was one of comfort with where policy was positioned.. Small but meaningful slack in the labor and product markets combine with underlying inflation roughly on the 2% target to provide little impetus for the BoC to move off their current setting at the bottom-end of the 2.25-3.25% neutral range, they added.National Bank Financial economists Taylor Schleich, Matthieu Arseneau and Alexandra Ducharme asked if the description of the Canadian economy in a 'technical recession' accurate, and should we be concerned? "Not really," they said. First, the trio noted, the 0.1% annualized contraction is so small that there is a risk that, after revision, it will cross back over the growth threshold. Secondly, they noted, while today's data is "undoubtedly disappointing", there is a key variable that must be taken into account when analyzing Canadian GDP data: the population. Due to the ongoing slowdown in immigration decided by Ottawa, the country's population was smaller in the first quarter of 2026 than in the fourth quarter of 2025. This means that real GDP per capita growth was largely positive (+0.9%) in the last quarter and has been on an upward trend for two years.Of commodities, gold traded higher for a second day midafternoon Friday as the dollar weakened on expectations the U.S. war on Iran is nearing an end, pushing oil prices lower and easing inflation worries that have pushed up the currency. Gold for July delivery was up US$60.70 to US$4,593.10 per ounce.But West Texas Intermediate crude oil closed at a six-week low amid reports the U.S. and Iran will extend their tenuous ceasefire while a Trump Administration official said the two sides are nearing a deal to end the war. WTI crude oil for July delivery closed down US$1.54 to settle at US$87.36 per barrel, the lowest since April 17, while July Brent oil was down US$1.74 to US$91.97.
