The TSX Index is expected to open on a green note

The S&P/TSX Composite is expected to open on a positive note, supported by strength in the basic materials and healthcare sectors from the previous Trading session.

From a technical perspective, the index continues to trade near a crucial horizontal resistance zone around the 35,100 level, which is limiting near-term upside momentum and signalling some fragility in the broader trend structure. As long as the index remains below this resistance area, the short-term outlook is likely to stay cautious, with an increased possibility of consolidation or a mild corrective phase. On the downside, immediate support is positioned near the 34,600 mark. A decisive breakdown below this level could further weaken market sentiment and potentially trigger additional selling pressure toward the 34,400 area in the near term. Conversely, a sustained breakout above the 35,100-resistance zone would significantly improve the technical outlook and could pave the way for a stronger advance toward the 35,300 level over the coming sessions.

Global Market Sentiment

Global markets are trading cautiously as investors assess the latest economic data and Central Bank commentary for clues on the path of Monetary Policy. Inflation remains a key concern, while softer growth signals across major economies continue to support expectations for selective policy easing later in the year.

In North America, Market Participants remain focused on upcoming inflation and labour market data, which could influence expectations for both the Federal Reserve and the Bank of Canada. Canadian investors will also be watching domestic growth indicators closely, particularly as markets look for confirmation that the economy is stabilizing.

Geopolitical uncertainty and ongoing Supply-chain risks continue to create periodic Volatility, particularly in Commodity-linked sectors.

Commodity view — what will move the TSX

• Crude: WTI Crude Oil futures traded below $93 per barrel on Tuesday, near a five-week low, as markets balanced optimism over ongoing US-Iran negotiations against renewed military operations in southern Iran.

• Gold: Gold slipped below $4,550 an ounce on Tuesday, paring gains from the previous session as heightened uncertainty in the Middle East kept investors cautious about inflation risks.

• Silver: Silver fell below $77 an ounce on Tuesday, paring gains from the previous session as heightened uncertainty in the Middle East kept investors cautious about inflation risks.

• Copper: Copper futures slipped below $6.4 per pound on Tuesday, trimming gains from the prior session as elevated uncertainty in the Middle East kept inflation and Interest Rate concerns in focus.

Sector watch

Energy: Expected to lead if oil prices hold gains. Integrated producers and Upstream names remain in focus.

Materials: Gold miners may continue to benefit from safe-haven Demand, while base metal names react to global Manufacturing data.

Financials: Canadian banks will watch bond yields and economic growth signals, with Margin outlook remaining closely tied to the Yield-curve/">Yield Curve.

Utilities & Defensive: May attract interest if broader risk appetite weakens.

Technology: Rate-sensitive tech stocks will likely take direction from U.S. futures and Treasury yields. 

Currency Movements

The Canadian dollar is likely to track crude oil and broader U.S. dollar sentiment. A stronger loonie could pressure exporters, while commodity-linked strength supports broader TSX sentiment.

Canadian government bond yields are expected to mirror U.S. Treasury moves. Any significant yield shifts could impact financials, REITs, and utilities. 

What to watch today

• Opening moves in crude oil, gold, and copper
• Canadian dollar movement versus the U.S. dollar
• Canada and U.S. Bond Yield direction
• Any fresh Bank of Canada or Federal Reserve commentary
• Corporate updates from major TSX energy and Mining constituents

Outlook

TSX poised for a measured open as commodity prices and central bank expectations shape early sentiment, with energy and materials likely to lead.

Bottom Line: Oil and gold remain the key drivers for the TSX on May 26, while investors monitor interest-rate expectations and sector rotation across energy, materials, and financials.