The S&P/TSX Composite closed Monday at 34,960, down 0.86%, or 304 points, in a session that split sharply along sector lines. Bank stocks did the damage. Energy names did not follow them down.
The Bank-Energy Split, By the Numbers
CIBC led the decline among the Big Six, falling 2.6%. TD Bank shed 2.3%, Scotiabank closed 2.3% lower, RBC lost 2.1%, and BMO fell 1.9%. All five moved in the same direction on the same day, a rare degree of sector-wide alignment for the banks.
Energy told the opposite story. Canadian Natural Resources rose 0.7% and Cenovus Energy added 1.5%, tracking WTI crude's push to a five week high above $83 a barrel during the session. Outside the two dominant sectors, Shopify gained 1.1% and Celestica rose 2.4%, both continuing to track the rebound in US technology shares.
Every major bank fell in tandem Monday while energy and select technology names moved the other way, a divide sharp enough to show up cleanly across the session's biggest single-stock moves.
All five of the Big Six banks fell in tandem while energy and select technology names advanced, a split session pattern that is being tested by Tuesday's reversal in oil.
What Changed Overnight
The energy leg of Monday's trade is already being tested. Oil has given back more than 1% in Tuesday trading, as Iran's Foreign Ministry signalled for the first time in over a week that international mediation proposals were on the table and that negotiations with the US could resume. It is the first concrete pullback in a rally that had pushed crude up 30% since the ceasefire collapsed roughly two weeks ago.
If the energy trade cools from here, Monday's sector split loses its offsetting leg. A session where both financials and energy are soft would be a materially different setup for the TSX than the one that produced Monday's close.
The US Read Through
US benchmarks stayed choppy Monday. The S&P 500 closed at 7,437, down 0.28%, while the Dow fell 307 points, or 0.59%, to 51,839. The Nasdaq 100 finished close to flat. Gains in Microsoft and Alphabet were not enough to offset broader weakness, and the S&P 500's move capped a losing week in which the index fell 1.6%, the Nasdaq Composite dropped 2.9%, and the Dow was off 0.9%, driven by a continuing selloff in AI and semiconductor names that has run alongside the geopolitical volatility rather than been caused by it.
Currency and Rates
The Canadian dollar has slipped toward a one month low against the US dollar, with USD/CAD trading near 1.405 to 1.408. Government of Canada five year yields eased 3 basis points to 3.15% on Monday, holding well below the US 10 year yield near 4.6%, a gap that has widened as the Bank of Canada and the Federal Reserve diverge on their near term rate paths. The next scheduled catalyst for that spread is the Fed's July 29 decision, eight days out.