TSX is set to open with a measured tone today

The S&P/TSX Composite Index is expected to open on a higher note, tracking positive momentum from the U.S. markets, while gains in energy commodities are also likely to provide additional support to the index. With Canada’s market sensitivity to energy and mining names, early direction will likely hinge on oil, bullion and any notable moves in North American bond yields.

From a technical perspective, the index continues to maintain a constructive structure, trading comfortably above its 50-period Simple Moving Average (SMA), which remains an important dynamic support within the prevailing uptrend. The 14-period Relative Strength Index (RSI) is currently around 57.08, indicating sustained buying momentum while gradually approaching overbought territory. Meanwhile, price action is consolidating near the key 33,600 support zone. Holding above this level will be crucial to maintain the bullish bias. However, a decisive break below 33,600 could weaken short-term momentum and potentially trigger a corrective pullback toward the 33,300 and 33,100 support levels.

Global macro backdrop

Global markets remain sensitive to developments in the Middle East conflict, particularly concerns around disruptions to oil supply routes such as the Strait of Hormuz. Any prolonged disruption could impact roughly one-fifth of global oil shipments, raising inflation risks globally. 

Canada-specific themes

The Canadian dollar strengthened slightly against the U.S. dollar, supported by rising oil prices and easing safe-haven demand. However, domestic data remains mixed with the services sector contracting for a fourth consecutive month and Q4 labour productivity slipping slightly.

Markets are also watching the Bank of Canada, with expectations that policy rates may remain around 2.25% in the near term, reinforcing a stable but cautious monetary outlook.

Commodity view — what to watch

• Oil

Oil prices remain the dominant driver for the Canadian market. Crude oil trading around $77/bbl on 5 March. Prices have surged over 20% in the past month amid geopolitical tensions and supply risks.

• Gold

Gold prices have shown volatility recently as central bank buying slows and the U.S. dollar strengthens, leading to pressure on mining stocks earlier in the week. However, safe-haven demand could return if geopolitical tensions escalate further.

• Copper

Copper is trading near $5.78/lb, down slightly on the day but still more than 20% higher year-on-year following strong demand tied to electrification and infrastructure themes. 

Sector highlights

• Energy:

Benefiting from elevated oil prices. Potential outperformer if supply risks persist.

• Materials:

Sensitive to moves in gold and copper. Recent declines in gold prices weighed on miners earlier in the week.

• Technology:

Remains a driver of index rebounds, with strong moves in large constituents like Shopify.

• Financials:

Stable but sensitive to macro data and interest rate expectations.

FX and rates snapshot

The Canadian dollar is expected to take direction from both crude oil prices and broader U.S. dollar strength. Currency moves can influence exporters and commodity producers across the TSX.

Meanwhile, changes in North American bond yields remain a critical factor for equity valuations and sector rotation.

Outlook

The TSX appears set for a cautious start on March 5, with commodity prices and bond market movements likely to determine the early direction. Energy and materials stocks are expected to play a key role in shaping the index’s performance through the session.