05:08 PM EDT, 07/16/2026 (MT Newswires) -- The S&P/TSX Composite Index fell on Thursday as declines in base metals and financial shares outweighed gains in industrials, while investors assessed weaker-than-expected housing starts data and the outlook for Bank of Canada interest rates.

The index closed down 76.05 points, or 0.2%, at 35,340.15, with mixed sectors.

Industrials led gainers, up 2.2%, while base Metals led decliners, down 4%.

In commodities, gold fell on Thursday as the dollar and yields rose after a report showed US retail sales slowed in June.

The precious metal for August delivery was last seen down $65.30, or 1.6%, to $3,986.50 per ounce. Retail sales rose by 0.2% monthly in June, down from a rise of 1% in May and matching the consensus estimate, according to MarketWatch.

Meanwhile, West Texas Intermediate (WTI) closed lower on Thursday, even as escalating violence between the US and Iran kept the Strait of Hormuz closed. WTI crude oil for August delivery closed down 0.8% to settle at $78.95 per barrel, falling off the highest since June 15, while September Brent oil was last seen down 0.8% to $84.72.

In currencies, Commerzbank said the recent moves in the loonie have been driven primarily by broad-based US dollar weakness rather than Canada-specific developments.

Meanwhile, Canada Mortgage and Housing Corporation (CMHC) said Thursday that this year's housing starts in the country are expected to fall below last year's levels as elevated uncertainty, higher development costs, weaker demand and rising inventories continue to weigh on new construction activity.

The pace of housing starts in the first half of the year was below last year's level, reflecting weaker market conditions, said CMHC's Deputy Chief Economist Kevin Hughes in a note. The seasonally adjusted annualized rate of housing starts declined 6% in June to 238,971 units, down from 253,083 units in May, added CMHC. This figure was less than the consensus figure of 256,000 provided by MUFG Global Markets Research.

While the recent removal of the Harmonized Sales Tax on new builds in Ontario could support demand, the impact is unlikely to be felt until next year or 2028, given the typical lag between pre-sales and construction starts, TD Economics wrote in a note after CMHC's report on Thursday.

"Q2 activity was broadly in line with Q1, undershooting our expectation for a mild pickup," wrote TD Economist Marc Ercolao in the note.

Analysts continued to assess the outlook for Canadian interest rates following Wednesday's Bank of Canada policy decision.

The BoC is expected to remain on hold this year and hike rates in the second half of 2027, despite a more optimistic tone from policymakers on the domestic economic outlook, according to a UBS Global Research note.

UBS admitted in the note published for the media on Thursday that growth could improve and broaden toward the end of the year and into 2027. However, the bank remains cautious about ongoing uncertainty surrounding the US-Mexico-Canada Agreement review, which has effectively shifted toward a trade deal renegotiation process and introduces additional risks for the outlook.

Additionally, Rosenberg Research was surprised by the BoC's notably more upbeat assessment of the country's economy in Wednesday's policy statement. Canada's central bank kept its policy rate unchanged at 2.25% but upgraded its economic outlook, expressing greater confidence that a sustained recovery is taking place, said Rosenberg Research in a note Thursday.

Despite the stronger growth outlook, the shift doesn't indicate an imminent move toward tighter policy, according to Rosenberg. The BoC continues to expect inflation to decline as growth improves, noting that "economic slack will be gradually absorbed" through 2028.