04:18 PM EDT, 07/08/2024 (MT Newswires) -- The Toronto Stock Exchange ended higher on Monday with the S&P/TSX Composite Index closing closing up 67.10 points to 22,126.13 despite weak resource issues weighing.

The biggest gainers on the day were Health Care, up 1.2%, and Battery Metals, up 0.9% while Base Metals, down 1.5%, posted the biggest decline.

West Texas Intermediate (WTI) crude oil closed lower on Monday, falling for a second day on lower geopolitical risk as Iran elected a more moderate president amid ceasefire talks between Israel and Hamas, while Hurricane Beryl made landfall in Texas, closing export facilities. WTI crude for August delivery closed down US$0.83 to settle at US$82.33 per barrel, while September Brent crude, the global benchmark, closed down US$0.79 to US$85.75.

Gold prices also weakened, dropping off a seven-week high late afternoon on Monday as the dollar rose ahead of key U.S. inflation data coming this week. Gold for August delivery was last seen down US$30.70 to US$2,367.00 per ounce, after closing at the highest since May 22 on Friday.

With little economic data due out this week, market watchers have scant new information on where the country may currently stand in terms of interest rates after last month's 25 basis point cut. The release of inflation data and the Bank of Canada's own Business Outlook Survey later this month is expected to help shape the central bank's view on whether the next cut comes this month or September.

BMO economist Doug Porter in his weekly 'Talking Points' note of on Friday noted his team has often cited three main reasons why the Bank of Canada would proceed only very cautiously on rate cuts. The view was that BoC cuts independent of Fed moves could seriously weaken the Canadian dollar; that cuts could rekindle a smoldering housing market; and, that underlying wage pressures meant the bank could only go gradually.

How, Porter asked, are we doing on all three?

Porter noted the Canadian dollar has been "remarkably well behaved" in recent weeks, barely budging from the range of $1.36-to-$1.38 (or near 73 cents [US]) since the middle of April. And that Canada's housing market "remains remarkably sleepy."

That leaves the small matter of wages. Porter said the June jobs report "must have been a jolt" for the BoC. On the one side, he noted, the labor market is now "very clearly loosening," with the unemployment rate marching steadily upward to 6.4%.

"Long gone are the days of 50-year lows on the jobless rate and a million job vacancies." Instead, Porter said, now we are talking about the softest summer job market in more than a decade. Yet "wages simply refuse to relent".

Average hourly wages accelerated to a 5.4% year over year pace last month.

"While this particular metric appears to be at the very high end of estimates of wage growth," Porter added, "the back-up will be of some concern to the Bank. And that's especially so with no productivity growth, and ongoing job actions pushing for big wage gains. Making things very real of course is a strike this very day at Ontario's Liquor Control Board."

Meanwhile, National Bank today said markets are unconvinced the BoC will deliver a follow on cut in July, though odds did rise Friday with weaker than expected jobs data. According to National Bank, this uncertainty largely reflects uneasiness over May's CPI report and the potential for another hot print next week.

It added: "While the latest data wasn't ideal, we don't think it's wise to miss the forest for the trees. Inflation today is much better behaved, while the labour market is gasping for air."

Already, National noted, the 1.6% point increase from the 2022 forward is the largest in the G7 and "just off the podium among OECD nations." Left unabated, the bank said, a 7% plus unemployment rate would be in store this year if recent worsening labor market dynamics persist.

"To be sure," it added, "that is our baseline scenario and has been all year. The U.S. unemployment rate is also on an upward path but not to the same extent, which (still) argues for a faster pace of cuts in Canada this year. While BoC easing could help stem labour market weakness, policy lags mean cuts need to come sooner than later. To us, a July cut should be considered a higher probability outcome, as only a disastrous June CPI report should leave the BoC sidelined."

On the data that is due out this week, RBC said Friday's Canadian building permits data for May will be closely monitored given three-month rolling average values have trended higher in recent months, up from 257K to 282K in April.