International
TSX Closer: Index Jumps as Investors Assess Oil Rebound, Rate Outlook, Trade Developments
The Toronto Stock Exchange surged on Thursday as investors weighed a rebound in oil prices, the outlook for Bank of Canada interest rates, and fresh signals on Canada's labor market and trade negotiations with the United States.The S&P/TSX Composite Index closed up 114.12 points, or 0.33%, to 34,850.21, with gains in healthcare, industrials and base metals stocks outweighing declines in technology, telecommunications and battery metals shares.Industrials led gainers, up 1.16%, with Health Care, Utilities, Base Metals , Energy, and Financial, up 1.15%, 0.24%, 1.15%, 0.05%, and 0.35%, respectively. Battery Metals Index led decliners, down 4.98%, while Telecom, down 1.23%, and Information and Technology, down 1.31%.In commodities, gold moved up on Thursday as the dollar eased. The precious metal for August delivery was last seen up 0.9% to US$4,046.40 per ounce after falling to the lowest since Nov. 6 a day earlier.Meanwhile, the West Texas Intermediate (WTI) crude oil closed higher on Thursday, rising off a four-month low after reports a cargo ship was attacked near Oman, raising safety worries that could again keep ships trapped in the Persian Gulf.WTI crude oil for August delivery close up 2.3% to settle at US$71.92 per barrel after earlier touching US$68.90, while August Brent oil was last seen up 2.1% to US$72.28. UK Maritime Trade Operations on Thursday said the International Maritime Organization is suspending traffic through the Strait of Hormuz following reports a cargo vessel in the Strait was attacked. So far, there was no indication when the Strait will be reopened.The pressure also extended to currency markets, where the Canadian dollar remained under strain. The Canadian dollar is trading close to levels it last reached after the U.S. announced its "Liberation Day" tariffs in April 2025, Corpay Currency Research said Thursday. It reflects a sharp widening in two-year US-Canada yield spreads since early May, driven by a more hawkish US policy repricing, ongoing trade tensions, weakness in Canada's housing market, and expectations the Bank of Canada will look through energy-driven inflation, given subdued growth, said Karl Schamotta, chief market strategist at Corpay.However, the decline looks stretched, added Schamotta. From a technical perspective, the Canadian dollar is at extremely oversold levels last seen in 1985, suggesting the recent decline may have gone too far.In the meantime, Prime Minister Mark Carney on Thursday said Canada is prepared to modernize the Canada-United States-Mexico Agreement alongside its North American partners but will not agree to terms that do not serve the country's interests, CTV News reported."We could sign a bad deal this afternoon. We could have signed a bad deal a year ago. We're not going to sign a bad deal, so it has to be a real deal," CTV quoted Carney as saying at a press conference in Ottawa.Factors that have weighed on the Canadian dollar recently, including lower oil prices and shifting interest-rate expectations in the U.S. are exaggerated, even as upcoming trade talks and economic weakness weigh, Commerzbank said in a note. As recently as late April, the outlook was for a stronger Canadian currency, with the U.S. dollar versus the loonie briefly dipping below $1.36 as higher oil prices and Canada's position as a major energy exporter provided support amid Iran-war disruptions, Commerzbank wrote Thursday."These figures seem almost like something from another era when compared to the current ones," Commerzbank said. The greenback versus the loonie has climbed more than $0.06 to above $1.42, its highest since early April 2025. The move was driven by oil prices falling from their mid-April peak toward pre-Iran war levels, weakening Canada's terms of trade.On the monetary policy front, a new economic outlook pointed to a prolonged pause from the Bank of Canada.The Bank of Canada is expected to keep its overnight rate unchanged at 2.25% through this year, with rate hikes likely postponed until 2027 as economic growth gradually regains momentum, Deloitte Canada said on Thursday.BoC policymakers continue to balance opposing pressures as weak economic growth and excess capacity are helping to restrain inflation, while higher energy prices stemming from Middle East tensions present an upside risk, Deloitte wrote in its Summer Edition Economic Outlook note. At its June 10 policy meeting, the central bank said April's annual inflation increase to 2.8% was largely energy-driven, with limited signs of broader price pressures.With growth weak but not recessionary, the current policy rate remains appropriate, stated Deloitte.Besides, a new report released by the country's statistical agency on Thursday showed payroll employment in Canada rose 0.1% month over month, or by 22,000 jobs, in April, after little change in March, leaving year-over-year growth at 0.4%.Job gains were led by health care and social assistance, public administration and administrative support services, while losses in professional services, manufacturing and construction partly offset the increase, noted Statistics Canada.However, labor demand stayed weak, with April's job vacancies flat on the month at around 490,500 and down 3.4% year over year. The job vacancy rate, which measures vacant positions as a share of total labor demand, stood at 2.7% in April, down from 2.8% in each month from December 2025 to March 2026, added StatsCan.
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