04:19 PM EDT, 06/23/2025 (MT Newswires) -- The Toronto Stock Exchange was up for the first session in three on Monday, just failing to post a fresh record close Monday as investors overlooked divided opinions on the outlook for the Canadian economy, mixed commodity prices and geopolitical tensions in the Middle East to do some broad=based buying.

The S&P/TSX Composite Index closed 111.79 points, or 0.4%, at 26,609.36, back to within 10 points of its record close of 26,615.75 hit on June 12. Among sectors, the biggest gainers were Information Technology, up near 1.45%, Base Metals, up 1.4%, and Telecoms, up 1.1%. Energy was down 3.5% and the Battery Metals Index was nearly 1% lower.

On the outlook for Canada's economy, RBC sees a "very small likelihood the economy goes pear-shaped and requires substantial stimulus" while National Bank says the Bank of Canada will need to ease monetary policy further to stabilize the economy.

RBC in a 'Canada Rates Outlook' note published today said devising an investment thesis is "challenging in the best of times, and downright difficult right now" with macro and markets "hostage to U.S. policy uncertainty".

The bank said: "The delta on economic activity will be lower but the magnitude of the slowdown could encompass a wide range of outcomes. The direct hit from tariffs is minimal but the indirect channels (uncertainty and a US/global slowdown) should drag Canada down, at least temporarily."

"So far," the bank added, "the economy has been resilient. Headline inflation is contained, while core remains stubbornly sticky."

Over the second half of 2025, according to RBC, the bond market will need to navigate three influences: an uncertain macro backdrop and volatile data; a trimodal distribution of 2026 monetary policy risks; a heavy issuance calendar. It said: "We think the BoC is finished cutting interest rates. If growth & inflation cooperate, there is a low chance they cut twice and a very small likelihood the economy goes pear-shaped and requires substantial stimulus."

In contrast, National Bank in its Monthly Economic Monitor for June said the Canadian economy continues to show signs of weakness, held back by persistent uncertainty surrounding tariffs, which is "paralyzing" business investment decisions. Domestic demand remained sluggish in the first quarter, while the labor market deteriorated sharply, the bank added.

National Bank noted the manufacturing sector remains the main loser in the face of U.S. protectionist measures. It said: "The trend of front-loaded purchases by US companies, observed before the tariffs came into force, has logically been reversed. However, the economic repercussions go beyond manufacturing alone, as evidenced by job losses in other industries."

Despite this backdrop, National Bank noted, the Bank of Canada kept its policy rate unchanged for the second time in a row in the face of reaccelerating core inflation. "Although the geopolitical situation in the Middle East poses a risk to our inflation scenario, we remain sceptical that inflationary pressures will persist given the weakening labour market and the slowdown in wages," the bank added.

National Bank believes that the central bank will need to ease monetary policy further to stabilize the economy. The real estate market is in urgent need of support, as are households renewing their mortgages and facing a major payment shock, it said.

According to National Bank's forecasts, slight economic contractions are likely in the second and third quarters. The unemployment rate should stabilize at around 7.3%. The bank anticipates GDP growth of 1.3% in 2025 and 1.1% in 2026.

Of commodities, West Texas Intermediate fell 7% on Monday as Iran retaliated to the weekend attack on its uranium-enrichment sites with a missile attack on a U.S. military base in Qatar, but gave hours of notice in order to minimize casualties. WTI crude for August delivery closed down $5.33 to US$68.51 per barrel, down from an overnight peak of US$78.40, the highest in a year. August Brent crude was last seen up $5.27 to US$71.74

But gold traded higher late afternoon on Monday as the dollar weakened following the U.S. attack. Gold for August delivery was last seen up $6.50 to US$3,392.20 per ounce but remained under overnight highs of US$3,413.80.