12:14 PM EST, 02/18/2025 (MT Newswires) -- The Toronto Stock Exchange is up 44 points at midday with energy (+0.9%) and miners (+0.3%), the biggest gainers.

Utilities, down 1%, is the biggest decliner.

Oil prices were mixed early on Tuesday as a Ukrainian drone attack on an export pipeline in Russia damaged a pumping station and cut shipments on the 1.3-millon barrel per day line. A report also said OPEC+ is again considering a delay for the return of voluntary production cuts to market.

Gold prices rose even as the dollar advanced as safe-haven demand increases amid turmoil over U.S. trade policy.

On today's domestic CPI data, TD Economics said headline CPI inflation increased in January to 1.9% year-on-year, slightly above expectations for a 1.8% y/y print and above December's 1.8% y/y reading. The Bank of Canada's preferred "core" inflation measures also increased to 2.7% y/y, from 2.6% y/y in December. TD said energy prices were the main driver of higher inflation. Car prices also rose by 2.3% y/y, the first increase in eight months. TD noted the impact of the GST/HST break continues to act as a downward force on inflation. Restaurant costs dropped 5.1% y/y, while alcohol costs dropped 3.6% y/y.

TD noted headline inflation remains close to the BoC's 2% target, but it said there are signs that price pressures could move higher in the months to come. The GST/HST holiday has officially ended and the downward pressure on overall inflation will unwind. Stripping out this impact, inflation would have been 2.5% y/y, 0.6 percentage points higher than the headline print. Additionally, the three-month annualized trend of core inflation has been tracking above 3%, signaling that core inflation should continue to grind higher.

"The BoC is in a difficult place," TD said, before adding: "Does it weigh the downside risks to the economy in the face of U.S. tariffs, or does it focus on recent economic strength and the impact this is having on inflation? Markets are still pricing for another 25 bp cut in March, but price action this morning is paring back some of this. There is plenty of time between now and March 12th, and if the President's first few weeks are anything to go by, a lot could change before then."

Meanwhile, in a separate note, TD noted Canadian existing home sales dropped 3% month-on-month in January, weighed down by declines in Ontario and Quebec (-4% m/m). In contrast, sales were up in Alberta (+2.1% m/m). New listings jumped 11% m/m in January, marking the largest seasonally adjusted increase in new supply on record going back to the late 1980s, according to the Canadian Real Estate Association (CREA). The increase was driven by surges in B.C. and Ontario. The sales-to-new listings ratio plunged to 49.3% from 56.5% -- veering towards supply/demand levels that typically favour buyers. Canadian average home prices declined 2% m/m in January, weighed down by declines in Ontario (-7% m/m), and B.C. (-4% m/m). On the flipside, prices rose in Quebec (+1.8% m/m) and Alberta (0.7% m/m). The MLS home price index, a more "like for like" measure, was flat. Prices for detached units were flat, while condo prices fell 0.3% m/m.

In looking at the key implications, TD noted Canadian home sales and prices had gained some momentum since the BoC began cutting rates last May. However, listings jumped in January and CREA noted that last month's sales weakness was concentrated in the last week of the month. TD said: "This almost certainly indicates that tariff-related uncertainty was at play, with buyers displaying anxiety and sellers hurrying to list their properties ahead of potential economic softness."

Elsewhere, National Bank in a 'Monthly Economic Monitor' published on Monday said even though, at the time of writing, tariffs would only apply to steel and aluminum, the uncertainty for the rest of Canadian exports is such that it is undermining the business climate in Canada. With the easing of monetary policy over the past nine months, National Bank had hoped that investment projects that had remained on the drawing board would be deployed in 2025. It said the lack of visibility is such that several companies could keep these projects on hold. National Bank lowered its forecast for economic growth from 1.4% to 1.2%, which is in line with potential economic growth.