04:18 PM EDT, 05/20/2025 (MT Newswires) -- Canadian investors took up where they had left off last Friday, returning from the holiday weekend by pushing the Toronto Stock Exchange higher for a tenth-straight session and to yet another record close on Tuesday.

The S&P/TSX Composite Index closed up 83.7 points tp 26,055.63. The biggest gainers were Telecoms, up 0.45%, followed by Utilities, up 0.62%. Information Technology and Health Care, down 1.41% and 2.08% respectively, were the biggest decliners.

According to Dow Jones Market Data, FactSet Tuesday's gains add to the largest one week point gain for the TSX since the week ending Sept. 13, 2024. As of last Friday, the TSX was up for six consecutive weeks, and up 2,778.46 points or 12% over that period. This is the largest six-week percentage gain since the week ending Dec. 11, 2020 and longest winning streak since the week ending Oct. 18, 2024, when the market rose for six straight weeks.

Also as of last Friday, the TSX was up 1,018.41 points, or 4.1%, over the prior nine trading days, the largest nine day point and percentage gain since Friday, May 2, 2025. It is also the longest winning streak since Jan. 24, 2025, when the market rose for nine straight trading days. Month-to date the TSX was as of Friday up 4.55%, and year to date up 1243.99 points or 5%.

Tuesday's gains on the resources heavy index came in spite of mixed commodity prices and as veteran economist David Rosenberg noted Canada's CPI data earlier in the session "came in hotter than expected and put the BoC [Bank of Canada] into a bit of a bind" in terms of its decision on whether or not to cut its benchmark interest rate in June.

According to Rosenberg, the inflation numbers were a surprise given Canada's "wobbly economy replete with employment loss and widening spare capacity in the labor market". He noted the headline non-seasonally adjusted number was minus 0.1% month over month versus the minus 0.2% consensus estimate and while the year over year headline inflation rate did recede to plus 1.7% from plus 2.3% in March, this came in "a tad" above the plus 1.6% market expectation.

The problem, Rosenberg said, was an acceleration in the core median inflation rate to a rise of 3.2% year-over-year from 2.9% in March and beating estimates for a 2.9% rise, while noting the core-trim barometer "hooked up" to 3.1% year-over-year from 2.8% in March (consensus at Rosenberg Research 2.8%). On a sequential basis, both rose an outsized plus 0.4% month-over-month.

Rosenberg said while the removal of the consumer carbon tax allowed for a seasonally-adjusted fall of 0.2% month-over-month print on the headline, it was disappointing to see the core ex-food & energy index jump more than plus 0.3% month-over-month, which it has done in four of the past five months. "This places the BoC in a bit of a box," he added, while also noting the plus 0.4% month-over-month spike in the key CPIX measure (excludes the eight most volatile components as well as indirect taxes), which was the sharpest increase since April 2023.

For its part, National Bank noted while headline inflation at 1.7% versus the forecasted 1.6% might seem minor, the bank said it "masks a more significant trend: economists likely underestimated the deflationary impact of the carbon tax removal".

National Bank said core inflation measures might concern the BoC, with both the median and trimmed CPI rising 0.4% month over month, pushing their annual rates above the central bank's 3.0% upper target. "Given signs of economic deterioration and sticky inflation in the data, some may fear we are entering a period of stagflation that would make the central bank less eager to ease policy further," the bank wrote.

But despite these inflationary pressures, National Bank said the broader economic picture suggests in its view limited risk of sustained inflation. "For instance," it added, "few firms reported capacity constraints in Q1, implying that the recent rise in inflation is a temporary anomaly and there is minimal risk of persistent domestic inflation. Additionally, the economy is already showing numerous signs of strain including private corporations slashing jobs. With the economy already facing excess supply and as retaliatory tariff measures are relatively limited, this is not the moment for the Bank of Canada to fixate on inflation, a lagging indicator, but rather to focus on fostering conditions that sustain economic growth." National continues to anticipate a cut in the policy rate to 2.0% by the end of the year."

RBC noted it had been stressing the risks were skewed to 0-2 rate cuts instead of more and that the bar for terminal pricing to move below 2.25%, which is its estimate, would continue to be high. Its roadmap said that if CPI saw a "+0.3% m/m or higher on monthly core and it definitely leans to a hold". Indeed, RBC said today, with core measures averaging a "chunky" 0.37% monthly gain in April, the BoC will have a tough time justifying a cut in June after pausing in April.

Of commodities, West Texas Intermediate crude oil closed 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. WTI oil for June delivery closed down $0.13 to settle at US$62.56 per barrel, while July Brent crude was last seen down $0.10 to US$65.44.

But gold traded higher for a second day late afternoon on Tuesday as the dollar weakens following last week's downgrade of the U.S. credit rating by Moody's Ratings. Gold for June delivery was last seen up $63.10 to US$3,296.60 per ounce, remaining under the April 21 record of US$3,425.30 per ounce.