04:52 PM EDT, 07/23/2026 (MT Newswires) -- The S&P/TSX Composite Index edged lower on Thursday as weakness in technology stocks offset gains in energy shares, with investors assessing stronger Canadian retail sales data, escalating Middle East tensions and the latest US trade measures against Canada.

The index closed down 292.45 points, or 0.8%, at 35,192.66, with mixed sectors. Energy led gainers, up 2.2%, while Information Technology led decliners, down 2.7%.

In commodities, gold prices retreated on Thursday, falling off a two-week high as the dollar and yields rose after the US reported a sharp drop in initial jobless claims for the last week.

The precious metal for August delivery was last seen down $100.10, or 2.41%, to $4,051.80 per ounce. The US Labor Department on Thursday reported 187,000 fresh jobless claims last week, down from a revised 209,000 claims a week earlier and under expectations for 212,000 new claims, according to MarketWatch.

Meanwhile, West Texas Intermediate (WTI) crude oil closed sharply higher on Thursday, rising for a fifth straight day as fighting between the US and Iran continued and Yemen's Houthi militants widened the Middle East conflict by attacking two tankers carrying Saudi oil in the Red Sea.

WTI crude oil for September delivery was last seen up $5.36, or 6.2%, to settle at $92.19 per barrel, its highest level since June 4, while September Brent crude was last seen up $7.16, or 7.6%, at $101.23.

Canadian May retail sales advanced 1.0%, in line with its advance estimate, driven primarily by higher receipts at gas stations. The preliminary reading for June points to a 0.4% increase, Statistics Canada data showed Thursday.

Beyond the gas price increase, retail sales were solid in May, and a decent flash for June adds to the encouraging news, said Shelly Kaushik, senior economist at BMO.

"The economy seemed to be building momentum in Q2, although additional challenges -- more tariffs, extreme weather, and the renewed energy price shock -- await in the second half of the year," Kaushik wrote.

All nine sectors were higher, led by sporting goods and hobby stores (+1.8%), general merchandise (+1.0%) and building materials (+0.9%). Nine of the 10 provinces posted higher sales, led by Saskatchewan (+2.9%). Nova Scotia was the lone outlier with a 0.8% drop driven by weaker sales at motor vehicle and parts dealers.

Looking ahead, expanded household benefits will support incomes and spending in the second half of the year, but the recent rebound in gasoline prices will limit the extent of any pick-up in retail sales volumes, noted CIBC's senior economist Andrew Grantham.

In currencies, Scotiabank said it is maintaining a medium-term bullish view on the Canadian dollar with an outlook that central bank policy will narrow US-Canada policy rate differentials.

The CAD entered Q3 slightly recovering its 2% decline in Q2 versus the US dollar, wrote Scotiabank in a note. "The forecasted Fed easing is paired with 75bps of tightening from the Bank of Canada, leaving the BoC at 3.25% by the end of our forecast horizon," the report said.

The analysts acknowledged that "sentiment and positioning" continue to give a bearish leaning on CAD, which is a "major vulnerability." Scotiabank recently adjusted its USD/CAD forecast with a Q4 2026 target at $1.37 and a Q4 2027 target at $1.33.

Additionally, small business confidence rose to 58.3 points in July, about 8 points above June, but confidence among manufacturers continued to lag at 53.7 index points, the Canadian Federation of Independent Business (CFIB) reported Thursday.

The manufacturing sector's confidence, which hasn't recovered since 2023, has been hit harder by tariffs than by either the 2008-09 recession or the pandemic, the CFIB reported. The sector is contending with higher shipping and receiving costs.

Meanwhile, responding to the latest US trade measures, Prime Minister Mark Carney said ahead of a meeting with Canada's premiers that the government would do "whatever it takes" to defend Canadian businesses, workers and families.

"We are in a stronger position than we were when this trade war started 18 months ago," Carney said Thursday, according to a video of his remarks in Charlottetown, P.E.I.

On Monday, the White House said it will hit a host of goods including Canadian alcohol, hockey equipment, and electronics with a 50% tariff starting next month.