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TSX Closer: Investor Nerves Tighten on Eve of TD Earnings Report as the Index Posts Its First Drop in 11 Sessions

4:14 PM ET 05/21/2025 - MT Newswires

The S&P/TSX Composite Index closed down 216.46 points to 25,839.17. Among sectors, Health Care and Information Technology were the biggest decliners, down 2.64% and 2.32% respectively.

Of individual stocks, market focus is on Toronto-Dominion Bank (TD.TO, TD) which will launch the big banks' second-quarter earnings season tomorrow, Thursday. Analysts at National Bank said in a note last week that they forecast cash earnings per share of $1.81, compared to a consensus $1.75. The FactSet forecast is $1.77 versus $2.04 a year earlier.

National Bank expects key themes in the TD result to include: another strategic review update; elevated expense growth (excluding AML remediation costs); and an indication that TD's buyback pace is on track to meet objectives. National Bank doesn't expect a dividend increase.

Bigger picture, market focus is already on the Bank of Canada meeting set for June to see if it cuts the key benchmark interest rate, after holding it steady in April.

According to one Macquarie economist, the BoC is likely to await more data and assess the outlook before introducing any more rate cuts. David Doyle, head of economics at Macquarie, noted Canada's inflation data yesterday was mixed for April. On the inflation outlook ahead, Macquarie expects an "uneven moderation" in underlying inflation in Canada. It noted the unemployment rate has risen to 6.9% and private-sector wage growth has "moderated sharply." Moreover, Macquarie said, shelter inflation is likely to continue to subside with low population growth a driver. In terms of the BoC's outlook, Macquarie added yesterday's data lowered the overnight index swap market's implied probability of a rate cut on June 4 to near 30% (from 68% before the decision).

While Macquarie continues to see intermittent cuts of 75 bps from the BoC by year end, it said recent firm data leads it to push out the timing of its next expected cut to July from June. In Macquarie's view the BoC is likely to await more data and assess the outlook with a new Monetary Policy Report forecast in July.

Of commodities, West Texas Intermediate crude oil fell for a second day on Wednesday as rising inventories offset early buying that followed a report Israel is readying a strike on Iranian nuclear facilities. WTI oil for July delivery closed down $0.46 to settle at US$61.57 per barrel, while July Brent oil was last seen down $0.53 to US$64.85.

But gold prices rose for a third-straight session late afternoon on Wednesday on higher geopolitical risk following a report that Israel is planning to strike at Iranian nuclear facilities while the dollar weakened. Gold for August delivery was last seen up US$36.50 to US$3,349.10 per ounce.