TSX Surges 1.35% as Nvidia Beats and Oil Retreats Below $100
TSX Surges 1.35% as Nvidia Beats and Oil Retreats Below $100
A blowout Nvidia earnings report and accelerating US-Iran peace diplomacy conspired to lift Canadian equities, while a sharp drop in crude oil — below the psychologically important $100 mark — offered relief to consumers and rate-watchers alike.
Bay Street Bounces Back
Canadian equities logged their best single-day gain in weeks on Thursday as two powerful tailwinds converged: Nvidia's standout quarterly results lifted North American tech sentiment broadly, while peace-talk progress between the US and Iran sent oil prices tumbling more than six percent. The S&P/TSX Composite Index climbed to 34,197.87, recovering the ground lost during Tuesday's selloff and then some.
Chipmaker Beats Estimates, Rewards Shareholders
After Wednesday's close, Nvidia reported first-quarter results that surpassed Wall Street's already lofty expectations and issued forward guidance that reinforced the insatiable global appetite for AI infrastructure. The company unveiled an $80-billion share buyback authorization — stacked on top of an existing $40-billion program — and raised its quarterly dividend from 1 cent to 25 cents per share. The announcement rippled northward: Shopify and other Canadian tech names saw renewed investor interest, a reversal from Tuesday when Shopify fell one percent and Constellation Software dropped three percent ahead of the results.
Oil Slides as Iran Diplomacy Gains Ground
West Texas Intermediate crude tumbled to $97.83 a barrel — its first close below $100 in several weeks — as diplomatic momentum on the US-Iran file continued to build. Pakistan's interior minister visited Tehran earlier in the week as part of mediation efforts, and US President Donald Trump signalled the conflict could be resolved "very quickly." For Canadians, the drop in crude carries mixed implications: cheaper fuel prices would provide relief for household budgets and could ease headline inflation, but energy-sector stocks and provinces relying on oil royalties face a tighter revenue picture if the decline is sustained.
April CPI Undershoots — Core Inflation at Five-Year Low
Canada's April inflation reading, released earlier this week, came in at 2.8% year-over-year — below the 3.1% consensus forecast, even as higher gasoline prices pushed the headline figure up from March's 2.4%. More importantly for the Bank of Canada, core inflation measures decelerated more than expected to their lowest levels in five years. The softer core print supports the central bank's argument that energy-driven price pressures may eventually fade without requiring further rate increases — welcome news for mortgage holders and businesses carrying variable-rate debt.
Banks Benefit From the Oil Pullback
Lower crude prices have historically eased credit concerns for Canada's big banks by reducing the risk of stress in energy-sector loan books. On Thursday, TD Bank and BMO both built on Wednesday's gains of more than 0.5%. The S&P/TSX Capped Financial Index added 1.97%, making financials one of the day's strongest-performing sectors alongside an energy index that managed a modest 0.31% gain despite falling oil prices — a sign that investors are betting the energy pullback will be short-lived.
Looking Ahead
Investors will keep one eye on geopolitical headlines out of the Middle East, where any reversal in peace talks could quickly send crude back above $100. Domestically, the Bank of Canada's next rate decision will be closely scrutinized in light of the softer-than-expected inflation data. The USMCA review scheduled for July 1 remains a longer-term overhang, and any escalation in US-Canada trade tensions could weigh on the loonie. For now, the mood on Bay Street is cautiously optimistic — but as this week demonstrated, that can change in a single session.
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