The TSX Index is expected to open on a positive note

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

From a technical standpoint, the index continues to trade near a crucial horizontal resistance zone around the 34,600 level, which is capping 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 34,200 mark. A decisive breakdown below this level could weaken market sentiment further and potentially trigger additional selling pressure toward the 33,900 area in the near term. Conversely, a sustained move above the 34,600 resistance level would improve the technical outlook significantly and could pave the way for a stronger advance toward the 34,900 level over the coming sessions.

Global Market Sentiment

Global markets are ending the week with a risk-aware tone as investors continue balancing resilient economic data against persistent Inflation concerns. Recent commentary from major central banks has reinforced expectations that policymakers may maintain a cautious stance on rate cuts, keeping markets highly sensitive to incoming data.

In Canada, attention remains on domestic inflation trends, employment conditions, and consumer Demand signals, all of which will shape expectations around the Bank of Canada’s policy path. Investors are also watching U.S. macro releases closely, given their direct impact on North American market sentiment.

Geopolitical developments and global trade uncertainty remain secondary but important market drivers, particularly for Commodity-linked equities.

Commodity view — what will move the TSX

• Crude: WTI Crude Oil futures traded around $96 a barrel on Friday, trimming earlier gains of nearly 3%, as renewed hopes emerged that the US and Iran could reach a diplomatic agreement. US Secretary of State Marco Rubio said there had been “slight progress” in mediated talks with Iran.

• Gold: Gold hovered above $4,500 an ounce on Friday and was on track to finish the week little changed, as conflicting signals surrounding US-Iran peace negotiations kept investors cautious over inflation risks and the outlook for interest rates. 

• Silver: Silver held above $76 an ounce on Friday and was on track to finish the week little changed, as conflicting signals surrounding US-Iran peace negotiations kept investors cautious over inflation risks and the outlook for interest rates.

• Copper: Copper futures were at $6.2 per pound, sustaining the pullback from the record high of $6.65 on May 13th as skepticism over a peace agreement in the Middle East maintained energy prices elevated, squeezing demand for Manufacturing inputs.

Sector watch

Energy: Likely to remain the primary TSX driver if crude holds gains. Integrated producers and oil sands operators could outperform.

Materials: Gold miners may benefit from safe-haven flows, while copper and diversified miners react to industrial demand expectations.

Financials: Banks will be sensitive to bond yields and economic growth signals, particularly any changes in the Canada-U.S. rate spread.

Utilities & Defensive: Could see selective interest if broader Market Risk appetite weakens.

Technology & growth: Canadian tech names will likely track broader U.S. Nasdaq sentiment and Yield/">Treasury Yield movements. 

Currency Movements

The Canadian dollar is expected to remain highly correlated with crude oil and broader U.S. dollar movements. A stronger loonie could modestly pressure exporters, while commodity-linked strength supports overall sentiment.

Canadian bond yields are likely to mirror U.S. Treasury trends. Any unexpected yield spike could create Volatility in banks, utilities, and real estate names. 

What to watch today

• Early moves in crude oil, gold, and copper
• Canadian dollar direction versus the U.S. dollar
• Canada and U.S. Bond Yield movements
• Any fresh Central Bank commentary
• Corporate headlines from major TSX energy and Mining names

Outlook

TSX set for a cautious open as commodity prices and central bank expectations remain the key market drivers heading into the weekend.

Bottom Line: Oil and gold are likely to steer early TSX direction on May 22, while investors remain focused on rates, inflation, and sector-specific moves in energy, materials, and financials.