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The Rate Cuts Are Over — Is a Hike Coming?

  July 23, 2026 Oil shocks, sticky inflation and a technical recession are pulling the Bank of Canada in opposite directions at once. For most of the past two years, the only question about the Bank of Canada was how far and how fast it would cut. The overnight rate fell from 5.00% to 2.25% between June 2024 and October 2025, one of the sharpest easing cycles in the Bank's history, and it has held there through six consecutive decisions since. That story is now over. The question on the table for the rest of 2026 isn't whether the Bank cuts again — it's whether the next move is actually a hike. Two conflicting signals, one Bank The case for staying put — or even cutting — comes from the growth side of the ledger. Statistics Canada data showed the economy contracted in both the fourth quarter of 2025 and the first quarter of 2026, meeting the informal definition of a technical recession. That was enough to have some economists warning the Bank had no room to raise rates at a...
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Oil Surges Toward $98 as Red Sea Attacks Escalate — TSX Holds Near Record High | Daily Markets Update, July 23, 2026

 

Thursday, July 23, 2026

Oil is the story again this morning. Brent crude jumped as much as 4.6% to touch $98.44 US a barrel before easing slightly, its highest level since May, after Iran-backed Houthi rebels said they struck two Saudi oil tankers in the Red Sea — opening a new front in a conflict that's already kept crude climbing for weeks. U.S. crude (WTI) pushed above $90 US for the first time since early June. That's on top of Wednesday's session, when Canada's S&P/TSX composite index closed at a fresh record high, even as U.S. tech stocks wobbled after Alphabet and Tesla both spooked investors with ballooning spending plans in their earnings reports.

🇨🇦 Canada: TSX Closes at a Record, But Oil's Latest Jump Cuts Both Ways

Canada's main index closed up 116.03 points, or 0.3%, at 35,485.11 on Wednesday — another all-time closing high, even as U.S. President Donald Trump issued fresh tariff threats on generic drug imports from Canada. BMO Global Asset Management's Sadiq Adatia described the market as "chugging along," looking for a catalyst to break out but staying calm on trade noise investors have seen before.

IndexCloseChange
S&P/TSX Composite35,485.11+116.03 (+0.33%)
Canadian Dollar (US$)70.98¢+0.03¢

Gold miners led the advance as bullion climbed toward $4,155 US an ounce on safe-haven demand, with Agnico Eagle up 3.5%, Barrick up 2.8%, and Franco-Nevada up 3.1%. Energy producers also gained on the oil rally, though technology names dragged: Shopify fell 3.9% and Constellation Software slid 2.1% ahead of the U.S. Big Tech earnings that would go on to disappoint. Rogers Communications dropped 4.6% after posting a $726-million quarterly net loss, while generic drug maker Apotex Health lost nearly 8% on Trump's new tariff threat.

Today's wrinkle: gold has actually pulled back below $4,100 in early trading as the fresh oil spike lifts bets on a Fed rate hike, and Cenovus Energy reports earnings this morning — a name to watch given crude's latest leg higher. Futures tracking the TSX are mixed, caught between stronger energy and weaker tech sentiment carried over from Wall Street.

🇺🇸 United States: Alphabet and Tesla Spending Plans Spook Wall Street

IndexClose (Wed.)Change
Dow Jones Industrial Average52,218.58-6.06 (-0.01%)
S&P 5007,498.96-10.65 (-0.14%)
Nasdaq Composite25,690.90-147.24 (-0.57%)

U.S. indexes barely moved Wednesday during the regular session, pressured by rising oil prices, but the real action came after the bell. Alphabet beat revenue expectations but raised its 2026 capital-spending outlook to a range of $195–205 billion, and shares fell about 3% in after-hours trading. Tesla tumbled roughly 6% after free cash flow turned negative and capital expenditures jumped 142% as Elon Musk pushes further into robotaxis and humanoid robots — overshadowing a revenue beat. Both moves are weighing on U.S. futures this morning, alongside a busy backlog of earnings still to come from Microsoft, Meta, and Amazon.

Behind the scenes, rate expectations are shifting: fed funds futures on Wednesday priced in a 34% chance of a Fed rate hike this month — up sharply from just 10% a week earlier — with a 78% chance of at least a quarter-point hike by September, according to CME's FedWatch tool. That's a notable change in tone, driven largely by oil-fed inflation worries.

🌍 Europe & Asia: Chipmakers Rally, All Eyes on the ECB

Asian markets are broadly higher this morning. Japan's Nikkei 225 added 0.55% and the Topix gained 0.22%, while South Korea's Kospi jumped as much as 2.8% — with chipmakers Samsung Electronics and SK Hynix both up more than 3% — as investors bet Korean chipmakers will benefit from continued global AI infrastructure spending, even after Alphabet and Tesla's spending-related stumbles. Australia's S&P/ASX 200 rose 0.72%, and mainland China's CSI 300 has extended its recent gains.

European futures pointed modestly lower ahead of the open — London's FTSE 100 down about 0.2%, Germany's DAX off roughly 0.4%, and France's CAC 40 down around 0.2% — with traders looking ahead to the European Central Bank's rate decision at 8:45 a.m. ET. After a surprise 25-basis-point hike in June — its first increase since 2023 — markets are pricing a roughly 90–95% probability the ECB holds its deposit rate at 2.25% today, with President Christine Lagarde's press conference watched closely for hints about a possible September move. Wednesday's European session saw the DAX up 0.7% and the CAC 40 up 0.9% as energy heavyweights benefited from the oil rally, with Spain's Banco Santander and Germany's UniCredit both gaining on solid earnings.

💡 What It Means for You

At the pump: Crude near $90–98 US a barrel will likely show up at Canadian gas stations within days if it holds. Worth filling up sooner rather than later if you're driving a distance this week.

On your mortgage: Rising Fed rate-hike odds and hotter oil-driven inflation expectations are pushing bond yields up, which tends to lift fixed mortgage rates first. If you're renewing soon, it may be worth locking in a rate rather than waiting.

In your TFSA or RRSP: Gold miners and energy producers have been the TSX's strongest performers this week — a reminder of how commodity-heavy the Canadian market is compared to the tech-heavy S&P 500. If your portfolio is US-tech-focused, note that Wednesday's Alphabet and Tesla pullback shows investors are getting pickier about AI spending, not just cheering every capex number.

📌 What to Watch Today

  • ECB rate decision at 8:45 a.m. ET, followed by Lagarde's press conference at 9:30 a.m. ET
  • Cenovus Energy earnings before the TSX open — a direct read on how producers are pricing the oil spike
  • U.S. jobless claims, Philadelphia Fed manufacturing index, and leading economic indicators at 8:30 a.m. and 10:00 a.m. ET
  • Continued fallout from Alphabet, Tesla, and IBM earnings, plus reports due from AT&T and American Airlines
  • Any further escalation around the Red Sea and Strait of Hormuz, given how directly it's been moving oil, gold, and the loonie this week

Market data reflects levels as of Wednesday's close and Thursday morning trading as of publication. Figures can move quickly — always check a live quote before making investment decisions. This article is for informational purposes only and is not investment advice.

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