TSX holds flatline as investors weigh Bank of Canada survey, trade outlook

Investing.com - Canada’s main stock exchange was just above the flatline on Monday, amid string of U.S. corporate earnings, an investors assessed ongoing global trade tensions and Bank of Canada survey.

By 4.00 ET, the S&P/TSX 60 index standard futures contract was down by 1 point, or 0.06%.

Toronto Stock Exchange’s composite index barely avoided the red, gaining just 3 point, or 0.01%, to end at 27,317.

Firms surveyed by the Bank of Canada describe a cautious approach to business planning as trade tensions and tariffs continue to affect expectations for sales, investment, and hiring.

The second-quarter data show that expectations of tariff-related cost pressures have moderated compared with the first quarter. The Bank said that around one-third of businesses now expect higher input costs from tariffs, a drop from about two-thirds in the prior survey, as the scope of implemented tariffs has proven narrower than previously anticipated.

A report that U.S. President Donald Trump was considering fresh tariffs on the European Union weighed on sentiment. Industrial shares, including Canadian Pacific (NYSE:CP) Kansas City (TSX:CP), declined, while Canadian National Railway (TSX:CNR) and Air Canada (TSX:AC) also dipped.

Traders are now keeping an eye out for the Bank of Canada’s Business Outlook Survey on Monday, which could provide some insight into how firms view the operating environment during a time of broad economic uncertainty.

US stocks mixed

U.S. stock index were mixed ahead of string of key second-quarter earnings, with some of Wall Street’s biggest firms set to report.

The benchmark S&P 500 rose 0.2% to closing at 6,308.46, the tech-heavy Nasdaq Compositehad increased 0.4%, and the 30-stock Dow Jones Industrial Average had fell19 points, or 0.04%

Tech titans Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) are set to highlight a large slate of earnings this week.

The two, who will report on Wednesday, are part of the so-called "Magnificent Seven" group of mega-cap tech stocks and are likely to provide trading cues for the broader market.

A host of strong bank earnings helped keep investor spirits high last week, even as several major lenders warned of heightened economic uncertainty because of Trump’s trade tariffs. Much of the focus will now center around the impact of the levies on the operating outlook for the year.  

Key results on Monday came from telecoms group Verizon Communications which lifted the lower end of its annual earnings per share growth range thanks to solid demand for its higher-tier wireless plans.

Coca-Cola Co (NYSE:KO), Philip Morris International (NYSE:PM), RTX Corp (NYSE:RTX), Texas Instruments (NASDAQ:TXN), Chubb (NYSE:CB), Lockheed Martin (NYSE:LMT), and General Motors (NYSE:GM) are set to report on Monday and Tuesday.

Wall Street hovers near record highs despite tariff uncertainty

Wall Street indexes lost some ground on Friday amid persistent concerns over Trump’s trade tariffs. A report said that Trump was still considering a 15% to 20% baseline levy on the European Union.

The EU, for its part, has reportedly been pushing for the current 10% baseline U.S. duty on imports from the bloc to remain in effect.

Trump has outlined steep "reciprocal" tariffs against several major economies, which are all set to take effect from August 1. While the White House has signaled that trade negotiations are ongoing, the U.S. has so far struck a substantially smaller number of trade deals than Trump had promised earlier this year.

Concerns over the economic impact of higher tariffs kept investors on edge, and helped pull the main U.S. stock averages off record highs hit last week.

Oil prices slip

Elsehwere, oil prices inched down, swayed by concerns over the impact of trade tensions on demand and the effect of European sanctions on Russian crude supplies.

Brent crude futures had dipped by 0.45% to $68.97 per barrel, while West Texas Intermediate crude futures was also lower at around 12.05 ET.

Last week, the EU approved a fresh set of measures against Russia over the longstanding conflict in Ukraine. The latest package particularly targeted India’s Nayara Energy, which exports oil products refined from Russian crude.

Analysts at ING flagged that the market had a muted reaction to the sanctions, arguing that traders are "not convinced" by their effectiveness.

But they said: "The part of the package likely to have the biggest market impact is the EU imposing an import ban on refined oil products processed from Russian oil in third countries."

Gold gains

Gold prices pushed up, taking some support from safe-haven demand that has been fueled by persistent uncertainty over U.S. tariffs.

The results of Japan’s upper house elections, held over the weekend, also showed the ruling Liberal Democratic Party losing its majority, casting doubts over the future of Japan’s government and the country’s ongoing trade talks with the U.S.

A mild pullback in the dollar, after a two-week ascent, helped spur some advances in metal markets as well.

Spot gold ticked higher by 1.41% to $3,397.52 an ounce, while gold futures for September rose 1.55% to $3,410.37/oz by 12.05 ET.