Weekly Market Snapshot: TSX Holds Near 34,000 as Banks Rally and Loonie Slips
Canadian markets closed another turbulent week navigating Middle East tensions, a high-stakes U.S.–China summit, and fresh inflation signals from south of the border. Here is everything Canadian investors need to know right now.
📈 TSX Equities: Banks Lead, Outliers Steal Headlines
The S&P/TSX Composite Index traded near the 34,000 mark all week, closing Thursday at 34,267 — a gain of 0.67% on the session and up a remarkable 32.32% compared to the same time last year. The broad gains came as investors watched the highly anticipated summit between U.S. President Donald Trump and Chinese President Xi Jinping, with Trump describing the talks as "extremely positive and constructive."
Canada's big banks were the week's standout performers. Royal Bank of Canada surged 2.3% and BMO Financial Group advanced 1.9%, providing much of the index's upward momentum. The banking sector was buoyed by improving sentiment around North American trade and relief that geopolitical negotiations — however fragile — appear to be moving forward.
Not everyone had a good week, though:
- Canadian Tire fell 4.1% despite posting first-quarter adjusted profit above analyst expectations — a reminder that "beat but guide cautiously" can still send shares lower.
- Keyera Corp. gained 3.9% even after reporting a quarterly loss, as investors focused on forward pipeline volumes rather than the near-term bottom line.
- Sherritt International was the week's biggest loser, plunging over 24% after warning that its Q1 financial filing could be delayed following the resignation of its external auditor and the departure of its finance chief. A double governance red flag that sent investors for the exits.
On the data front, Canadian home sales rose modestly in April while prices edged slightly lower, and wholesale trade climbed 1.9% in March, coming in above forecasts. Both readings suggest the domestic economy is navigating tariff headwinds better than feared, though the recovery remains uneven.
💵 Canadian Dollar: Loonie Dips Back to 1.37
The Canadian dollar softened this week, retreating to approximately 1.37 per U.S. dollar — its weakest level since late April. The pullback came after hotter-than-expected U.S. inflation data showed headline American CPI accelerating to 3.8%, reinforcing expectations that the U.S. Federal Reserve will keep rates elevated for longer. A stronger greenback and rising U.S. Treasury yields weighed on the loonie from both directions.
The loonie's recent stumble follows a seven-week high of 1.358 reached at the end of April. The currency is expected to remain range-bound between roughly 1.34 and 1.38 for May, with firm Canadian oil revenues providing a partial offset. Any renewed escalation in the Middle East — which could tighten the Strait of Hormuz — remains an upside risk for oil but an uncertainty drag on global risk appetite.
🏦 Bank of Canada: Holding at 2.25% — Next Decision June 10
The Bank of Canada held its overnight policy rate steady at 2.25% at its April 29 meeting, and markets widely expect it to remain there through the summer. Governor Tiff Macklem cited the challenging balancing act between cost-push inflation (driven by elevated oil prices linked to the Middle East conflict) and demand-side weakness (reflected in April's surprise drop of 17,000 jobs and an unemployment rate climbing to 6.9%).
Canada's March CPI came in at 2.4% year-over-year — above the Bank's 2% target and sharply up from February's 1.8%. The single largest driver was a historic 21% monthly spike in gasoline prices. The Bank's own projections now anticipate inflation edging back toward 2% in 2027, meaning relief is coming — but not this quarter.
The next rate announcement is Wednesday, June 10, 2026. Mortgage holders on variable rates have little relief on the horizon; those renewing fixed-rate mortgages in 2026 are still likely to face significantly higher payments than they were accustomed to before 2022.
🗓️ What to Watch Next Week
| Date | Event | Why It Matters for Canadians |
|---|---|---|
| May 28 | Bank of Canada — Financial Stability Report | Signals risks to the financial system, housing market concerns |
| Ongoing | Middle East ceasefire / Iran negotiations | Directly drives oil prices and CAD strength |
| Ongoing | U.S.-Canada trade / CUSMA review signals | Any tariff escalation hits Canadian exports & business investment |
| June 10 | Bank of Canada Rate Decision | Key for mortgage renewals and variable-rate holders |
📌 Bottom Line for Canadian Savers & Investors
The TSX's year-over-year gain of over 32% is impressive, but the index remains sensitive to two forces outside Canada's control: global energy prices and U.S. monetary policy. Banks are performing well, but job losses in April serve as a reminder that the domestic economy is not firing on all cylinders.
For everyday Canadians, the key takeaways are:
- Mortgages: The BoC is on hold — variable-rate holders see no change, but renewals remain expensive.
- Savings rates: With prime at 4.45%, high-interest savings accounts and GICs still offer meaningful returns. Shop around before renewing.
- Currency: The loonie is in a 1.34–1.38 band. Cross-border shoppers and travellers should plan accordingly.
- Oil & energy stocks: WTI near C$140/bbl is a windfall for Alberta and Saskatchewan — energy-sector exposure continues to reward patient investors.
Stay informed, stay ahead — and we'll see you again next week for the next Canadian Money Brief snapshot.
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