04:22 PM EDT, 05/30/2025 (MT Newswires) -- The Toronto Stock Exchange fell for a second-straight day on Friday after running up record highs earlier this week, as one veteran market watcher said the Bank of Canada "would be well advised to get off its derriere" on interest rates.

Not helped by lower commodity prices and a gloomy outlook in Canadian GDP data released earlier in the session, the S&P/TSX Composite Index closed down today by 35.5 points to close out the week at 26,175.05. Sectors were mixed, with none rising by even near 1%, while Base Metals and Energy and Health Care were both down near 1.7%.

Of commodities, West Texas Intermediate crude oil closed lower for a second day on Friday, moving down on the prospect of surplus supply as the market awaits final court decisions on the legality of blanket U.S. tariffs on the country's trading partners. WTI crude for July delivery closed down $0.15 to settle at US$60.79 per barrel, while July Brent crude was down $0.20 to US$63.95.

Also, gold traded lower late afternoon on Friday as the dollar rose after data showed a key measure of U.S. inflation fell more than expected last month. Gold for August delivery was last seen down $26.00 to US$3,317.90 per ounce.

Much of the focus Friday was on Canadian GDP data as market watchers looked for an update on the health of the economy given the uncertainty over a potential global trade war. They were also looking for clues as to whether or not the Bank of Canada would get back on the interest-rate cut path next Wednesday.

David Doyle, head of economics at Macquarie, said Canada's Q1 real GDP data had a "strong headline, but showed weakness beneath the surface". He noted the headline was up 2.2% annualized, above the consensus for a rise of 1.7%, but this outperformance was offset by a downward revision to Q4 2024. "Final domestic demand was flat at -0.0% with ownership transfer costs a substantial headwind, a development we had anticipated," Doyle added.

Looking ahead, Doyle said Canada's growth is likely to remain subdued due to headwinds from trade policy uncertainty, with this likely to weigh in particular on the auto sector, and a further slowdown in population growth, as well as headwinds to housing activity from mortgage rates resetting higher. "We see a modest contraction to flat activity as the most likely outcome through year-end," Doyle said.

For his part veteran economist David Rosenberg published a noted entitled 'Canadian Economy On Thin Ice" in which he said, in summary, the major point in today's Q1 GDP report was the modest contraction in real final domestic demand and the "mere" 0.5% growth built into Q2.

Rosenberg noted the monthly GDP showed March coming in soft at +0.1% month over month, and so the 'hand off' to Q2 is a "paltry" +0.5% annual rate. Rosenberg said what that means is the disinflationary output gap is widening again and, as such, the Bank of Canada "would be well advised to get off its derriere". After all, he noted, +0.5% is not far off the flat number the Bank had estimated in its first tariff shock scenario in its latest Monetary Policy Report. "To be sure, not the disaster in the second scenario (-1.3%), but the economy is sufficiently weak to allow the BoC to bring the policy rate down to the lower end of its neutral range of 2.25%-3.25%, which means at least two more cuts are required," Rosenberg added.

In a separate note entitled 'Technical Analysis - Global Equity Markets', Walter Murphy at Rosenberg Research noted the TSX successfully tested important support during its tariff related decline, and then rebounded. It said the index is now on the verge of decisively breaking out above the 25,454-25,876 key resistance range. "The ability to finish this week entirely above that range would do much to seal the deal and turn the range into important first support," he added. In turn, the research noted, a breakout would increase the potential for a challenge of the 27,250 area, plus or minus about 2%.

With that nearby potential in mind, Rosenberg Research said it is important to note the improving weekly Coppock Curve is crossing above its neutral zero line. "The indicator is on pace to maintain this bullish bias into late June/early July. This suggests a rally decisively into positive territory for the indicator and a probable follow-through of a breakout to higher highs for the TSX," it added.

Rosenberg Research noted the Coppock indicator has had a bullish bias for a majority of the TSX sectors since late April. This majority bullish condition has the potential to continue into July.