TSX Futures Rise as Investors Await Bank of Canada Rate Decision, Oil Prices Jump

Futures for Canada's S&P/TSX Composite Index advanced modestly on Monday, recovering some of the prior session's losses as investors brace for a pivotal interest rate decision from the Bank of Canada and digest a sharp rise in oil prices.

Futures on the main Canadian stock index were up 0.2%, according to Investing.com data. The move follows a 0.76% decline for the benchmark index on Friday, which was driven by a retreat in materials and technology shares.

Bank of Canada in Focus

The primary event for Canadian markets this week is the Bank of Canada's (BOC) interest rate announcement on Wednesday. Policymakers are widely expected to hold the benchmark policy rate at 2.25% for a seventh consecutive meeting. The central bank is balancing ongoing trade friction with the U.S. against core inflation that remains near its 2% target.

While the BOC is expected to stand pat, financial markets are pricing in nearly 75 basis points of rate increases over the next twelve months. The central bank previously noted at its April 29 meeting that significant economic impairment from new U.S. trade restrictions could warrant rate cuts to support growth.

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Economic Data and Energy Sector

Investors will also monitor Canada’s August labor force survey, scheduled for release on Friday. Economists expect the report to show an addition of 15,000 jobs, with the unemployment rate holding at a two-year low of 6.4%.

Separately, the energy sector, a major component of the TSX, is poised for a strong open after a military escalation in the Middle East over the weekend. Reports of U.S. and Iranian strikes sent global crude oil benchmarks jumping nearly 3% to trade above $90 a barrel, providing a tailwind for Toronto-listed energy producers.