12:27 PM EDT, 05/22/2026 (MT Newswires) -- The Toronto Stock Exchange is up 98 points at midday with most sectors higher.

The tech sector, up 1.7% is the best performer, followed by telecoms, up 1%.

Healthcare, down 0.9%, is the sole decliner

In economics, the focus was on the release of retail sales data for March, and an advance figure for April. TD noted retail sales rose 0.9% month-on-month in March, ahead of the 0.6% gain reported in the advance estimate. In volume terms, sales declined 0.7% m/m, showing higher prices eating into activity. Statistics Canada's advance estimate pointed to a 0.6% m/m increase in April.

The inflation effect was expected in March and is going to carry through to April with the CPI showing goods prices rising a cumulative 1.8% (seasonally adjusted) through these two months, noted TD Economics. "The sinking volumes figures suggest consumers are already cutting back, as higher energy prices eat into budgets," the bank said.

TD's outlook is that private domestic demand, and particularly consumer demand, will be subdued in the second quarter, largely due to significantly higher energy prices. Provided energy prices begin falling in June, this should provide some relief and help private domestic demand gain traction in the second half of 2026, the bank said. For the Bank of Canada, the current slack in the economy should allow them to look through the initial energy shock and wait for more clarity on how pervasive inflation pressures are becoming, it added.

CIBC said overall while headline sales were a little stronger than the consensus forecast and advance estimate, that surprise wasn't large enough to change the underlying message. Namely that inflation-adjusted consumer spending appears to be stalling again following a solid start to the year. "That stall in spending will limit the ability of higher gasoline prices to spread to wider inflationary pressures, enabling the BoC to look through the near-term spike in headline inflation and keep interest rates on hold this year," it added.

The issue of the lingering tariffs war with the United States remains and Reuters overnight cited a Pentagon official as saying the U.S. decision to suspend planned biannual defense talks with Canada follows deepening concern that Ottawa is failing to take steps to become a "credible" security partner, including by hiking military spending and completing a review of an F-35 fighter jet acquisition. The Pentagon announced on May 18 it was "pausing" its participation in the U.S.-Canada Permanent Joint Board on Defence, the senior advisory body on North American continental defense established in 1940.

In stocks, CAE (CAE.TO) is down 13% today and touched a new 52-week low of $34.16, after it reported its fourth-quarter earnings on Thursday after hours.