TSX Steadies on Softer Core Inflation Data

The S&P/TSX Composite Index gained 0.5% on Wednesday as progress in US-Iran negotiations helped offset lingering inflation concerns that continued to keep bond yields elevated. In the latest diplomatic effort, Pakistan’s interior minister arrived in Tehran, with Pakistan acting as a mediator after hosting peace talks last month. Oil prices retreated, although they remained above $100 per barrel. Canada’s April inflation data released yesterday came in below forecasts despite higher energy costs pushing headline inflation higher. The recent pullback in oil prices eased some pressure on banking stocks and the broader index, with TD Bank and BMO both gaining more than 0.5%. Meanwhile, gold prices edged higher, supporting mining shares, with Barrick and Wheaton Precious Metals both rising over 0.5%. Investors also awaited Nvidia’s earnings results later in the day, which were expected to influence sentiment toward Canadian tech stocks. Shopify fell 1%, while Constellation Software lost 3%.

Futures tracking the S&P/TSX Composite Index edged higher on Wednesday as progress in US-Iran negotiations helped offset lingering inflation concerns that continued to keep bond yields elevated. In ?the latest diplomacy, Pakistan’s interior minister arrived in Tehran, with Pakistan acting as a mediator and conveying messages between both sides after hosting peace talks last month. Oil prices retreated, although they remained above $100 per barrel. Canada’s April inflation data released yesterday came in below forecasts despite higher energy costs pushing headline inflation higher. The recent pullback in oil prices is set to to ease some pressure on banking stocks and the broader index. Meanwhile, gold prices edged higher, offering support to mining shares. Investors are also awaiting Nvidia’s earnings results later in the day, which will influence sentiment toward North-American tech stocks.

The TSX fell 0.3% to close at 33,741 on Tuesday, pressured by losses in heavyweight mining stocks as gold prices declined. Agnico Eagle dropped 3.8%, Barrick lost 2.8%, and Wheaton Precious Metals shed 4.8%. Gold prices weakened as uncertainty surrounding the Middle East conflict and persistent inflation concerns continued to weigh on sentiment. Meanwhile, Canada’s annual inflation rate accelerated to 2.8% in April from 2.4% in March, largely driven by higher gasoline prices, though the reading came in below forecasts of 3.1%. Core inflation measures slowed more than expected to their lowest levels in five years, supporting the Bank of Canada’s view that energy-driven inflation pressures may eventually fade and easing concerns over further rate hikes. Most major banks traded higher, with BMO gaining 0.9%. Energy producers also advanced as oil prices remained elevated, with Canadian Natural up 2.8% and Suncor adding 1.9%.