Canadian stocks edged higher on Friday as investors welcomed the developments in U.S.-Iran negotiations to end the war. However, today's economic data release, technically indicating the economy is in recession, held traders back from big moves which capped the gains.
After opening higher than yesterday's close, today the benchmark S&P/TSX Composite Index gave ground initially but later gained momentum to trade positively throughout the rest of the session before settling at 34,758.57, up by 240.87 points (or 0.70%).
Five of the 11 sectors posted gains today, with the IT sector leading the pack.
As the U.S.-Israel versus Iran war entered day number 91 today, the ceasefire announced early in April still holds.
A couple of days before, U.S. forces stationed near Iran targeted Iranian boats attempting to lay sea mines across the Strait of Hormuz and missile-launching sites near the port city of Bandar Abbas in southern Iran. In retaliation, Iran's Islamic Revolutionary Guards Corps launched strikes on U.S. bases.
Yesterday, Axios reported that a Memorandum of Understanding, aiming to extend the ongoing ceasefire for another 60 days and allow the immediate reopening of the Strait of Hormuz, has been drafted.
The report stated that the proposal needs to be approved by U.S. President Donald Trump. According to the MoU, the 60-day period would be dedicated for discussing Iran's nuclear programs.
Today, Trump explained his stance on the framework agreement through Truth Social. Trump acknowledged that the negotiations have advanced on lesser issues but stated that key points needed to be worked out.
Trump reiterated that Iran must neither develop nor possess a nuclear bomb and repeated his demand for unearthing the enriched uranium material buried deep underground (Nuclear Dust) in Iran and destroy it with assistance from the U.S., Iran, and the International Atomic Energy Agency.
Trump wanted the immediate reopening of the Strait of Hormuz with unrestricted shipping traffic in both directions and no tolls levied. He urged Iran to remove or detonate all the sea mines planted by the nation earlier.
Trump promised to lift the U.S. naval blockade on Iranian ports if Iran complies with his demands. Trump added that he would take a final call after a meeting in the Situation Room of the White House.
Following Trump's post, expectations of the resumption of oil and energy trade across the Strait of Hormuz after nearly three months' time increased and market sentiments received a boost.
On the economic front, data released by Statistics Canada revealed that the Gross Domestic Product in Canada decreased at an annualized 0.10% rate in the first quarter, extending the 1.00% drop from the previous period.
With imports surging, and falling business capital investment (0.70%) and government capital investment (2.50%), the numbers reveal that three of the last four quarters have posted negative GDP growth.
Economists are concerned that the economy has slipped into a technical recession. However, since monthly GDP figures suggested mild positive growth in Q1 2026, the true trajectory of the economy is uncertain, according to experts.
Q2 2026 numbers will be released by Statistics Canada on August 28.
Yesterday, the Bank of Canada released its annual Financial Stability Report.
The report warned of increasing vulnerabilities, especially from the Middle East war, all of which could crystallize and expose Canada's economy to more damage.
Major sectors that gained in today's trading were IT (4.68%), Materials (2.61%), Communication Services (0.48%), Financials (0.34%), and Consumer Staples (0.24%).
Among the individual stocks, Celestica Inc (10.17%), Coveo Solutions Inc (7.49%), Kinaxis Inc (5.56%), Montage Gold Corp (8.34%), Equinox Gold Corp (8.29%), and Aya Gold and Silver Inc (7.84%) were the prominent gainers.
Major sectors that lost in today's trading were Industrials (0.19%), Healthcare (0.39%), Real Estate (0.88%), Utilities (0.98%), and Energy (1.16%).
Among the individual stocks, International Petroleum Corporation (3.07%), Vermilion Energy Inc (3.06%), Imperial Oil (3.06%), Hydro One Limited (2.31%), Firstservice Corporation (3.41%), and Mda Space Ltd (8.42%) were the notable losers.
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May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.