Record Highs, Stronger Loonie, and a Big Inflation Week
The TSX Hit Records… But This Week Could Test the Rally
Hope you had a great weekend.
Last week was another reminder that markets can look strong and still have pressure underneath.
The TSX climbed to fresh record highs again, helped by better economic data, commodity strength, and investor confidence that interest rates may not need to rise as quickly.
In the U.S., softer inflation data also gave investors some relief.
But the week was not all smooth.
Technology stocks pulled back on Friday.
AI-related names were tested again.
Oil prices stayed sensitive to Middle East headlines.
And Canada-U.S. trade talks remained a major risk as the August 19 tariff deadline moved closer.
So the big question this week is simple:
Are markets rising because the economy is truly getting stronger, or because investors are hoping interest rates stay where they are?
Let’s break down what moved the market last week, and what Canadian investors should care about:
📈 Market Pulse: TSX Hits Records, Then Cools Slightly
🇨🇦 TSX Composite (36,730.27 | +1% for the week): Canada’s main stock index ended Friday at 36,730.27, down 0.1% on the day.
That small pullback came after 5 straight days of gains. The TSX still posted a record closing high on Thursday and finished the week up nearly 1%.
So far in 2026, Canadian stocks have continued to show strength, even with tariff uncertainty, oil volatility, and global tension in the background.
But Friday showed the rally was not perfect.
Technology fell 2.8%, giving back most of its previous day’s gain.
Celestica dropped about 4%, which weighed on the sector.
At the same time, energy and metal mining shares helped soften the pullback.
💵 The Loonie Got a Boost
The Canadian dollar also had a stronger week. The loonie moved near a two-month high against the U.S. dollar and was on track for its 3rd straight weekly gain. And a few things helped:
Canada’s economic data looked better than feared.
U.S. inflation data came in softer.
And investors became less worried about another near-term U.S. rate hike.
But the loonie is not fully out of the woods. Trade uncertainty, oil prices, and tariff headlines can still move it quickly.
💡 Simple takeaway:
The TSX had another strong week and hit fresh record highs, but the market was not strong everywhere. Commodities helped, while technology became a drag by the end of the week. Meanwhile, the loonie got some support last week, but Canada-U.S. trade tension is still one of the biggest risks to watch.
🇨🇦 Canadian Economy: A Few Signs of Strength
Canada also got some encouraging economic updates last week.
Building permits rose 18.5% in June to $14.9 billion, which means more construction projects were approved.
Wholesale sales rose 2.8% to $92.5 billion, showing stronger demand from businesses.
Manufacturing sales edged up 0.1% to $78.8 billion, marking the fifth straight monthly gain.
However, this does not mean the whole economy is booming. But it does show that some parts of the economy are still moving forward.
Construction plans improved.
Business demand looked better.
And manufacturers still had a lot of work in the pipeline.
📊 One important update to watch is Canada’s July inflation report, which comes out later this morning. That number can affect what the Bank of Canada does next with interest rates. If inflation comes in hotter than expected, the Bank may stay cautious. If it cools, it gives the Bank more room to be patient.
👚 Canada’s retail sales report also comes out later this week (Friday), which will give investors a better idea of whether Canadians are still spending or starting to pull back.
💡 Simple takeaway:
Canada’s economy is not strong everywhere, but last week’s data gave investors a few reasons to feel better. Now the focus shifts to inflation and consumer spending.
🇺🇸 U.S. Markets: Softer Data, Mixed Stocks
U.S. markets had a mixed end to the week.
For the week:
S&P 500: up 0.4%
Nasdaq: up 0.1%
Dow: down 0.6%
Softer inflation data helped investors feel more comfortable that the Federal Reserve may not need to raise rates right away.
That was good for markets.
But weaker retail sales and lower consumer sentiment raised another concern: Are consumers starting to slow down?
That’s an important question, because consumer spending is a huge part of the U.S. economy.
If people spend less, companies can feel it through weaker sales, weaker profits, and slower hiring. Investors will also be watching the next Fed update for clues on whether officials are still more worried about inflation or becoming more concerned about slower growth.
🤖 Meanwhile, AI stocks were tested again last week.
Applied Materials ($AMAT) fell on Friday even after reporting stronger results. But the issue was expectations. A lot of AI-related stocks have already had big runs.
So now, investors want more than good news. They want great results.
💡 Simple takeaway: U.S. inflation data helped markets, but weaker consumer numbers reminded investors that the economy is still not risk-free. And, while AI is still a major market story, investors are getting pickier. The market wants proof, not just hype.
💵 Trade and Tariffs: What the August 19 Deadline Means
The August 19 tariff deadline is one of the biggest Canadian stories to watch. Here’s the simple version:
Canada and the U.S. are trying to reach a trade deal before the deadline.
If they do not reach a deal, delay the deadline, or create exemptions, the U.S. could move ahead with new tariffs on a range of Canadian imports.
A tariff is basically a tax on goods coming into a country. So if a Canadian product gets hit with a U.S. tariff, it becomes more expensive for American buyers. That can hurt Canadian companies because their goods may become less competitive.
For example, if a Canadian company sells products into the U.S. and those products suddenly become more expensive because of tariffs, American buyers may look for cheaper options somewhere else.
That can create a chain reaction:
Businesses may face higher costs.
Customers may pay higher prices.
Companies may delay hiring or spending.
Canada could respond with tariffs of its own.
Investors may become more cautious.
This is why the deadline matters. It is not just a political date. It can affect businesses, jobs, prices, the Canadian dollar, and the stock market.
💡 Simple takeaway: If no deal or delay happens before August 19, tariff pressure could rise quickly. Even if a last-minute deal happens, businesses may still stay cautious until they know the rules are clear.
📝 Final Thought: My Finance Femster Take
This is a market where investors need to stay focused, not emotional. The TSX is hitting records, the loonie is getting support, and some Canadian economic data looks better. But tariffs, AI stock pressure, oil prices, and consumer weakness are still real risks. So yes, the market looks strong… but that does not mean every person should rush in without understanding the full picture.
🗓️ This week, I’ll be watching two things closely: Canada’s inflation report this morning and the August 19 tariff deadline.
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Stay calm, stay diversified, and keep compounding.
Cheers 💫
Your Wealth Coach,
Finance Femster