04:24 PM EDT, 05/23/2025 (MT Newswires) -- The Toronto Stock Exchange has now been down just one session in the last 13 after the resources heavy index rose again on Friday, buoyed by higher commodity prices, but even as Rosenberg Research remains underweight on the Energy sector and while investors are unsure of what to expect from the Bank of Canada when it meets again on June 4.

The S&P/TSX Composite Index rose modest 25.9 points to close at 25,879.95. Dow Jones Market Data, FactSet noted going in to today the index was up 4.08% month to date, and 4.55% year to date.

Sectors were mixed, with Base Metals the only one rising by more than 1% and Information Technology the sole one falling by more than 1%.

Of commodities, gold was sharply higher late afternoon Friday as the dollar plunged after U.S. President Donald Trump threatened to impose 50% tariffs on imports from the European Union on June 1, adding yet more turmoil for the global economy and raising safe-haven demand. Gold for August delivery was last seen up $63.50 to US$3,387.10 per ounce, pressing close to the April 21 record high of $3,425.30.

Also, West Texas Intermediate crude oil rose for the first time in four days despite concerns over rising supply as the high-demand summer driving season begins this weekend with the U.S. Memorial Day holiday. WTI oil for July delivery closed up $0.33 to settle at US$61.53 per barrel, while July Brent crude was last seen up $0.30 to US$64.74.

Still, Rosenberg Research in an Energy Sector Outlook entitled 'Oil's Not Well' said it remains underweight on the sector: "the macro outlook looks bad, and the risk-reward profile is constrained by mediocre fundamentals."

Rosenberg said the "rapid" decline in oil prices shows little sign of abating given the terrible macro outlook and OPEC+ supply pressure. It added this leads to little upside for the Energy sector, and its models do not have a favorable view. "The risk-reward profile and fundamentals are mediocre, but we do highlight a few brighter spots at the subsector level".

Rosenberg Research said prospects for the U.S. Energy sector "look tactically bleak", with oil and natural gas prices depressed and showing little upside over the next six months. It added trade wars have reduced the outlook for manufacturing production, exports, and container shipping volumes around the world. It remains underweight Energy, given both a problematic macro outlook and the weak risk-reward profile.

In conclusion, the research said: "We've been advising investors to trim risk away from highly cyclically exposed sectors like Consumer Discretionary, and the current market valuation represents a great exit point for that purpose. However, the Energy sector isn't a promising destination for capital--- the falling global growth outlook and low oil and natural gas prices leave little opportunity on the table, so we remain underweight."

Meanwhile, founder David Rosenberg, in a separate note of his own said today's Canadian retail sales number was "broadly mixed", but added the Bank of Canada "should find comfort" in the back-to-back dips in the price deflator. Rosenberg noted the headline came in "a tad above" expectations, up 0.8% month over month,(consensus was a rise of 0.7%). What was key was the "woeful" -0.7% plunge in the ex-auto segment. That was the steepest slide since May of last year, he added.

Rosenberg said even though much of that weakness reflected a price induced 6.5% MoM drop in gasoline prices, even after stripping out this and autos, retail sales still only managed to eke out a gain of less than 0.2% on the month. He added: "Bad for the Canadian dollar but good for the GoC bond market, and all of a sudden, the Bank of Canada is back in play. In fact, what stood out in the report was the -0.1% MoM reading in the retail price deflator for the second month in a row, and in conjunction with the deflated producer price data we got for April, tells us that the hot CPI number -- which was mostly food -- was actually more lukewarm than it seemed on the surface."

Rosenberg noted the year over year trend in pricing power in the broad retail sector has slowed from +2.5% in January to +2.3% in February and now to +2.2% as of March. "That should be fodder for the BoC policy doves and GoC bond bulls alike," he said.

Avery Shenfeld, chief economist at CIBC Capital Markets in his regular 'The Week Ahead' column noted core inflation measures in Canada would suggest the BoC should be holding steady on rates in June, with April ex-energy measures coming in on the high side. Shenfeld said that may well be the BoC decision in two weeks, but he added it would be based on what the data is showing now. "In terms of where it's headed," he added, "the coming week's GDP news will shed much more light, given the weight that the central bank rightly assigns to economic slack, the so-called "output gap," in steering turns in inflation."

Taylor Schleich, Director, Economics and Strategy at National Bank Financial, for his part noted that despite Canada's weaker growth outlook, poorer job market prospects and better contained inflation, 2025 policy rate expectations have evolved similarly here compared to the United States. As it stands, overnight index swap markets are priced for 50 bps of Fed easing this year while just over one BoC cut is discounted. Schleich noted consensus expects 50 bps from both. He said: "Relative to market pricing, we think risks are skewed in the opposite direction. To us, the BoC is likely to deliver more easing than is priced (and more than consensus). Fed pricing is closer to 'fair value' but listening to the FOMC, there's a clearer path to one (or no) cuts versus more than two."