12:14 PM EDT, 05/20/2025 (MT Newswires) -- The Toronto Stock Exchange is now near 100 points higher at midday with most sectors higher.

The biggest gainers are telecoms (+0.9%), followed by utilities (+0.8%).

Info tech and healthcare, down 1.3% and 1%, respectively, are the biggest decliners.

The resources heavy index is higher despite mixed commodity prices. Gold traded higher for a second day early on Tuesday even as treasury yields rise after last week's downgrade of the U.S. credit rating by Moody's Ratings. Oil edged lower as the price remains rangebound amid a weakening global economy and rising supply, though stalled talks between Iran and the United States are easing fears of yet more new barrels coming to market.

BMO Economics in its morning note said last week's U.S.-China trade truce helped boost most markets and raised the outlook for economic activity globally, and in Canada. BMO raised its forecast for real GDP growth to 1.0% this year and 1.2% in 2026, largely on a "rosier" outlook for U.S. growth. BMO is still expecting two quarters of negative growth in Q2 and Q3, but said that technical recession looks shallower than previously expected.

On the domestic economy, TD Economics noted headline CPI inflation for April out today came in at 1.7% year-on-year, down from 2.3% y/y in March but above expectations for a 1.6% y/y print. The deceleration was due to gasoline prices tumbling 18.1% y/y as the consumer carbon price was removed. Also notable was the bounce-back in travel tour prices, which rose 6.7% y/y in April after a 4.7% y/y fall in March. Prices on food purchased from stores rose 3.8% y/y, also adding to April's inflation. TD noted the Bank of Canada's preferred "core" inflation measures both accelerated, with the CPI-Trim rising from 2.9% y/y to 3.1% y/y in April, and the CPI-Median jumping from 2.8% y/y to 3.2% y/y.

In looking at the key implications, TD noted top line inflation "seemingly offered a reprieve", but it said the details of the report show that underlying inflation pressures picked up. Both of the BoC's "core" measures showed a notable uptick in April, rising 0.2 and 0.4 percentage points in the month. Even the traditional "core" measure of CPI (excluding food and energy prices) rose from 2.4% in March to 2.6% in April. "We had expected the inflationary impacts of tariffs to start flowing through later in the second quarter of the year -- the jump in April suggests this could be happening sooner than expected," TD added.

TD said today's inflation print is a setback for the BoC and complicates the picture for the path of monetary policy. However, TD added, with the government of Canada offering a temporary reprieve on some tariffs, and the labour market slowing rapidly, it believes the central bank will have enough space to deliver two more cuts this year, adding a bit more support to an economy quickly losing momentum.

CIBC noted while headline inflation was in line with its forecast, core measures looked stronger than anticipated which puts a question mark over the bank's forecast for a 25bp cut at the June meeting. It said that call now relies on next week's GDP data suggesting that the economy is tracking towards a contraction in Q2, which would be weaker than the BoC's less pessimistic "scenario 1" forecast within its April MPR. "Without that evidence, policymakers could well elect to wait for more data before making further any further reductions in interest rates," the bank added.