The TSX Index is expected to open on a negative note

The S&P/TSX Composite index is expected to open on a weaker note, pressured by softness in the energy and technology sectors from the previous Trading session.

From a technical perspective, the index continues to trade near a key horizontal resistance zone around 34,550, which is limiting near-term upside momentum and signalling some vulnerability 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 the possibility of consolidation or a mild corrective move increasing. On the downside, immediate support is positioned near 34,250, and a sustained break below this level could weaken sentiment further and expose the index to additional downside toward the 34,000 area. Conversely, a decisive breakout above 34,550 may strengthen the technical outlook and support a move toward the 34,750 mark over the coming sessions.

Global Market Sentiment

Global markets remain focused on Inflation trends and the timing of potential Monetary Policy easing from major central banks. Recent economic data has painted a mixed picture, with resilient labour markets offset by signs of slowing Manufacturing and softer consumer activity across several economies.

Investors are also monitoring ongoing geopolitical developments and trade-related uncertainties, both of which continue to influence Commodity markets and overall risk sentiment.

In Canada, Market Participants remain attentive to domestic economic indicators ahead of future Bank of Canada decisions. The direction of Canadian bond yields and their spread versus U.S. Treasuries will remain a critical Factor for TSX financials and broader Equity sentiment.

Commodity view — what will move the TSX

• Crude: WTI crude futures climbed above $91 per barrel on Thursday, rebounding from losses in the previous session as renewed hostilities between the US and Iran weakened expectations for a near-term peace agreement that could end the conflict and reopen the Strait of Hormuz. 
• Gold: Gold fell below $4,400 an ounce on Thursday, hitting a two-month low as reports of fresh US strikes on an Iranian military site clouded the outlook for peace negotiations, keeping inflationary and Interest Rate concerns in focus.
• Silver: Silver dropped below $73 an ounce on Thursday, hitting a three-week low as reports of fresh US strikes on an Iranian military site clouded the outlook for peace negotiations, keeping inflationary and interest rate concerns in focus.
• Copper: Copper futures fell below $6.25 per pound on Thursday from the one-week high of $6.4 earlier in the week amid cautious optimism of resorted trade through the Persian Gulf.

Sector watch

Energy: Expected to remain a primary market driver, particularly if oil extends recent gains.

Materials: Gold miners could outperform on safe-haven Demand, while copper and diversified miners track industrial activity expectations.

Financials: Canadian banks remain tied to Bond Yield trends and economic growth expectations.

Utilities: Interest-rate-sensitive sectors may react to any notable moves in bond markets.

Technology: Canadian tech shares are likely to follow broader U.S. market sentiment and Treasury Yield direction. 

Currency Movements

The Canadian dollar is expected to remain closely linked to commodity price movements, particularly Crude Oil. A firmer loonie may modestly pressure exporters, while commodity strength could support broader investor sentiment.

Canadian bond yields are likely to move alongside U.S. Treasury yields. Any significant changes in rate expectations could quickly impact financials and other rate-sensitive sectors. 

What to watch today

• Early trading action in crude oil, gold, and copper
• Canadian and U.S. bond yield movements
• Economic data releases from North America
• Any fresh Bank of Canada or Federal Reserve commentary
• Corporate developments from major TSX energy and Mining companies

Outlook

TSX expected to open cautiously on a down side as investors monitor commodity prices, inflation signals, and interest-rate expectations ahead of key economic data.

Bottom Line: Commodity price direction and bond yield movements are likely to remain the key drivers for the TSX on May 28, with energy, materials, and financials expected to lead market activity.