TSX Falls as BoC Holds Rates

The S&P/TSX Composite index inched below 33,500 on Wednesday following the BoC's decision to hold interest rates. The central bank kept its policy rate at 2.25%, as expected, maintaining a wait-and-see approach amid ongoing US-Iran tensions that continue to stoke inflationary fears on the economy. Oil prices extended their rally, raising concerns about global inflationary spikes, already evident in the surge of March's inflation print. Major banks including BMO, TD, and the Royal Bank of Canada traded near the flatline. Meanwhile, the oil spike has lifted energy stocks in recent sessions, while gold prices edged lower, pressuring miners. Canadian Natural gained over 2% while Agnico Eagle lost more than 2%. Separately, major US tech companies including Microsoft, Alphabet, Meta, and Amazon are set to report earnings after the close on Wall Street, potentially influencing Canadian tech stocks. Shopify shed over 1.5%.

Futures tracking the S&P/TSX composite index were muted on Wednesday as investors awaited interest rate decisions from the Bank of Canada and the US Federal Reserve. The Bank of Canada is expected to hold rates steady at 2.25% later today, adopting a wait-and-see approach as it assesses the impact of an energy shock from the Iran war. Oil price gains could spark global inflationary spikes and weigh on broader economic activity, which were already manifested in the surge in March's inflation print. Global oil prices extended their rally on Wednesday, fueling those concerns and pressuring banking stocks and the broader index. Meanwhile, the oil spike has lifted energy stocks in recent sessions, while gold prices edged lower, pressuring miners. Separately, major US tech companies including Microsoft, Alphabet, Meta, and Amazon report earnings after the closing bell on Wall Street and are likely to influence Canadian tech stocks.

The S&P/TSX Composite declined 0.7% to close at 33,584 on Tuesday, weighed down by stalled US-Iran negotiations. With the Strait of Hormuz effectively closed, fears of an energy shock sparking global inflation persist. Although the Bank of Canada and US Fed are expected to hold rates on Wednesday, investors worry that energy-driven stagflation could force a more hawkish stance later this year. Financials traded mixed, with Brookfield down 1.2% while the Royal Bank of Canada gained 1%. The mining sector posted sharp losses amid falling gold prices, with Agnico Eagle down 4.2% and WPM down 4.9%. In contrast, Canadian Natural added nearly 3.3% on rising oil quotes, while Suncor gained 1.4%. Celestica plunged 14.5% despite having reported strong results in Q1 2026, as techs have fallen on weak OpenAI results.