TSX Advances on Banking Sector Gains

The S&P/TSX Composite Index rose about 0.4% to trade above 35,000 on Monday amid support from banks. Canada’s banking regulator lowered capital requirements for major lenders for the first time in three years, freeing up cash for additional credit activity. RBC and BMO each added more than 1%. Meanwhile, oil prices declined after US and Iranian officials concluded their first round of talks in Switzerland, easing concerns over energy-driven inflation pressures. Canada’s annual inflation rate rose to 3.2%, above forecasts of 3%, as higher gasoline prices continued to drive the headline increase amid supply uncertainty linked to the closure of the Strait of Hormuz. However, softer core inflation measures tempered concerns over broader price pressures. Gold prices advanced, lifting WPM by 3.6% and Agnico Eagle by 1.3%.

Futures tracking Canada’s S&P/TSX Composite Index edged higher on Monday as investors weighed lower oil prices against stronger-than-expected fresh inflation data. Oil prices declined after US and Iranian officials concluded their first round of talks in Switzerland, easing concerns over energy-driven inflation pressures. Meanwhile, data released on June 22th shows that the annual inflation rate rose to 3.2% in May from 2.8% in April, above market forecasts of 3%. Higher gasoline prices continued to drive the headline increase, as supply uncertainty tied to the closure of the Strait of Hormuz pushed fuel costs higher for a third straight month. However, soft core inflation measures tempered concerns over broader price pressures. Investors also assessed the recent decision by Canada’s banking regulator to lower capital requirements for major lenders, a move seen as supportive for credit growth. Gold prices advanced, lending support to mining shares.

The S&P/TSX Composite Index fell 0.3% to close at 34,857 on Friday as investors reacted to the suspension of US-Iran talks. The discussions, aimed at addressing Iran’s nuclear program following a recently signed memorandum of understanding, were delayed, while the Federal Reserve’s surprise hawkish shift earlier in the week continued to weigh on sentiment. Financial stocks traded mixed, with RBC down 0.4% and TD Bank up 0.4%. Brookfield edged higher amid reports it is the frontrunner to acquire a controlling stake in XpFibre. Mining stocks moved lower as gold prices extended losses, with WPM down 4.8%, Agnico Eagle losing 2%, and Barrick falling 1.6%. Energy stocks were mixed amid uncertainty over US-Iran diplomacy, with Canadian Natural rising 1.2%, while Imperial Oil shed 0.6%.