The S&P/TSX Composite Index rose 0.7% to close at 34,759 on Friday, as weaker-than-expected GDP data reinforced expectations of a more dovish stance from the Bank of Canada. The Canadian economy unexpectedly contracted in the first quarter of 2026 from a year earlier, marking a second consecutive quarter of annual decline. This strengthened market conviction that the BoC will not raise interest rates in the near term, with investors broadly expecting a hold at the June 10 meeting.
Prospects of a more accommodative BoC, along with progress toward a US–Iran peace agreement, pushed bond yields lower and eased worries about higher borrowing costs. Both sides agreed to extend their ceasefire and lift restrictions on shipping through the Strait of Hormuz, though the deal still requires approval from US President Trump.
In financials, Royal Bank of Canada advanced 1.5%, while Great-West Lifeco gained 1%. Gold prices climbed for a second straight session, supporting miners such as Agnico Eagle, up 3.2%, and Wheaton Precious Metals (WPM), up 3.3%. Technology stocks also outperformed, with Shopify gaining 3.8% and Celestica surging 10.2%.