S&P/TSX Composite Index might open on a flat note

The S&P/TSX Composite Index is likely to open on a softer note, extending the recent sell-off and reflecting persistent weakness in investor sentiment. In the previous session, gains were primarily supported by the energy and basic materials sectors, offering limited relief to the broader market.

However, from a technical standpoint, the index continues to trade below a key rising trendline resistance near the 32,200 level, indicating ongoing fragility in the near-term structure. As long as this barrier remains intact, downside risks are expected to persist, with the potential for further consolidation or corrective movement. Immediate resistance stands near 32,200, and a sustained inability to reclaim this level may keep the overall market tone cautious in the near term.

Global Macro Backdrop

Global markets are starting the week with a mixed tone:

• U.S. equities closed last week with modest losses as investors weighed resilient economic data against concerns that inflation may remain sticky for longer than expected.
• Federal Reserve messaging continues to emphasize patience, with policymakers indicating that any rate cuts will depend heavily on sustained progress in inflation data.
• European markets are relatively flat, as stronger services activity is offset by continued weakness in manufacturing and export demand.
• Asian equities began the week mixed, with China showing modest strength on policy support expectations while Japan and Korea remain sensitive to currency volatility and global demand signals.

Bond yields remain elevated across developed markets, keeping pressure on equity valuations and reinforcing a “higher-for-longer” rate environment narrative. 

Macro News Impacting the TSX

The TSX Composite is likely to open with a defensive-to-neutral tone:

• Investors are positioning ahead of upcoming Canadian GDP and inflation data, which could influence Bank of Canada policy expectations.
• Month-end and quarter-end flows may still influence early trading, particularly in financials and large-cap energy names.
• Commodity-linked equities remain the dominant driver of index direction given Canada’s resource-heavy market structure.

Commodity view — what to watch

• Crude oil: WTI crude oil futures climbed back toward $100 per barrel on Wednesday, trimming earlier gains of more than 3% after President Donald Trump signaled a possible deal to end military operations in Iran, while still warning of major strikes on key infrastructure including Kharg Island if the Strait of Hormuz is not reopened. 
• Gold: Gold reversed earlier losses to trade around $4,500 per ounce on Monday, remaining volatile as the Middle East conflict entered its fifth week with no clear resolution in sight.

• Silver: Silver reversed earlier losses to trade around $70 per ounce on Monday, remaining volatile as the Middle East conflict entered its fifth week with no clear resolution in sight. Hostilities in the region intensified as Iran-backed Houthi militants in Yemen joined the conflict, targeting Israel over the weekend.
• Copper held below $5.5 per pound on Monday, struggling for traction as investors navigated ongoing hostilities in the Middle East that showed no signs of easing. Tensions escalated as Iran-backed Houthi militants in Yemen joined the conflict, targeting Israel over the weekend. 

Sector highlights

• Energy: Likely to open steady with a slight positive bias if oil maintains recent gains.
• Materials: Supported by gold strength and stable base metal prices.
• Financials: Sensitive to bond yield direction and interest rate expectations.
• Technology & Industrials: Expected to track broader global risk sentiment and U.S. market cues. 

Forex watch

• The Canadian dollar (CAD) is trading slightly weaker against the U.S. dollar as traders digest stronger U.S. macro data and stable oil prices.
• Currency movements remain important for TSX exporters, with a softer CAD generally supportive for commodity-linked earnings.

Bottom line:

The TSX Composite is expected to open with limited volatility and a slightly cautious tone as investors balance macro uncertainty with supportive commodity trends. Energy and materials are likely to provide early direction, while financials may remain range-bound ahead of key economic data releases.

Overall sentiment remains constructive but selective, with traders focused on inflation data, central bank policy expectations, and commodity price stability as key near-term catalysts for the Canadian equity market.