Canada’s main stock index moved lower on Friday as weakness in technology shares, particularly those tied to artificial intelligence, pressured markets while rising oil prices buoyed energy names.
Tech slump meets energy support
The S&P/TSX composite closed down 76.30 points at 35,263.85, with the technology sector the largest drag on the index. In the United States, a pullback in AI-related stocks helped send U.S. markets lower and filtered through to Canadian technology investments.
At the same time, escalating hostilities in the Middle East pushed crude oil prices higher. That lifted the TSX energy sector, as concerns grew about potential disruptions to shipments through the Strait of Hormuz after an expanded U.S. airstrike campaign hit Iranian infrastructure.
Why investors are watching inflation
Friday’s trading took place ahead of a key inflation report from Statistics Canada due Monday. A recent Reuters poll of economists compiled by LSEG Data & Analytics expects headline inflation to have cooled to 2.9 per cent in June, down from 3.2 per cent in May. Falling gas prices in June are expected to be a contributing factor that could pull annual inflation below the three per cent mark.
“The inflation story is not quite as hard to manage here for the Bank of Canada,”
The comment came from Steve Locke, chief investment officer for fixed income and multi-asset strategies at Mackenzie Investments, who said the Canadian economy has grown reasonably and that core inflation has been near the Bank of Canada’s two per cent target.
Market implications
Locke described the recent movements around the AI cycle and broader technology trends as producing only “minor volatility” in North American markets, but noted energy stocks benefit when conflict increases oil-price risk. Rising oil could, however, complicate July’s inflation reading if tensions persist.
- TSX close: 35,263.85 (down 76.30)
- Expected June inflation: 2.9% (Reuters poll)
- May inflation: 3.2%
| Metric | Value |
|---|---|
| S&P/TSX composite | 35,263.85 (−76.30) |
| June inflation (poll) | 2.9% |
| May inflation | 3.2% |
Investors will be parsing Monday’s inflation report for signs the Bank of Canada can remain on a path that supports steady growth without rekindling price pressures. Meanwhile, global developments — notably the U.S.-Iran exchanges and their impact on oil flows — add a geopolitical layer to what is otherwise a technology-driven market adjustment.
Markets remain sensitive to the ebb and flow of AI enthusiasm: when investors rotate away from high-growth, tech-heavy assets, the effect is felt across North American exchanges. At the same time, any sustained spike in oil prices could shift the balance, favouring energy stocks and complicating inflation dynamics for Canadian policymakers.
