TSX Rises After BoC Holds Key Rate

The S&P/TSX Composite Index rose over 0.5% to trade above 36,000 on Wednesday after the Bank of Canada kept its key policy rate unchanged at 2.25%, as widely expected. The BoC said recent data reaffirmed the Governing Council’s view of a broadening economic recovery. However, the bank noted that upside risks to inflation have increased, while new tariffs have made the growth outlook more uncertain. It left the future path for monetary policy open, saying it will adjust policy as needed. Financials traded mostly higher, with RBC and TD Bank rising nearly 0.5%, while BMO and Scotiabank gained around 1%. Miners rebounded as gold prices rose following a recent selloff, with Barrick and WPM rising nearly 4%, while Agnico Eagle added 2.5%.

Futures tracking Canadian stocks edged higher on Wednesday ahead of the Bank of Canada’s interest-rate decision. Markets will closely watch policymakers’ comments for clues on the path ahead, with the central bank widely expected to hold it's key interest rate at 2.25% this meeting. Canadian bond yields eased slightly after a global selloff in the previous session, as elevated oil prices and concerns over government debt in the US and other major economies pushed global yields to multi-month highs. Employment reports from Canada and the US due later this week could further shape monetary policy expectations.

The S&P/TSX Composite Index fell 1.2% to close at 35,826 on Tuesday amid rising global bond yields. Renewed Middle East hostilities lifted oil prices and prompted markets to reassess expectations for central bank rate hikes. The BoC is expected to leave rates unchanged on Wednesday, while Canada’s 10-year yield reached a near two-week high. Financial stocks declined, with TD Bank and BMO down 0.9% and National Bank losing 1.5%. Higher yields also weighed on gold prices, pressuring miners. Agnico Eagle fell 4.4%, Barrick and WPM declined 3.6% and Franco-Nevada shed 2.7%. Tech stocks extended losses, tracking weakness on Wall Street amid soaring AI-related corporate debt issuance. Shopify fell 4.7%, Constellation Software lost 2.8% and Celestica dropped 2.1%. In contrast, energy stocks gained, with Canadian Natural rising 3.7%, Suncor and Cenovus up 3.5% and Imperial Oil adding 3%.