Investors are counting on the financial sector to deliver some good news this week as most of the big Canadian banks start to deliver second-quarter earnings results.

"Overall, the economy should have been reasonably good for them," said Colin Cieszynski, markets analyst at CMC Markets Canada.

"So we would expect to see generally, probably decent earnings results, (they will) continue to bring down loan loss provisions and the interesting one will be do the other three banks raise dividends? That's one of the big things people are looking for. I suspect they will."

Canada's banks earned a combined $5.09 billion in the previous quarter, helped by lower loan losses and a resurgence in mortgages. Most of the banks came out with profits higher than analysts had expected, with Scotiabank (TSX:BNS), Bank of Montreal (TSX:BMO), TD Bank (TSX:TD) and CIBC (TSX:CM) all beating expectations. Royal Bank (TSX:RY) missed even as the bank posted the highest profit at $1.5 billion.

What has been particularly pleasing for investors is a gradual end to the drought of dividend increases, which had dried up in the wake of the 2008 financial crisis.

But over the last two quarters, National Bank (TSX:NA), Laurentian Bank (TSX:LB), Scotiabank and TD Bank have all raised dividends and hopes are high that holdouts Bank of Montreal, Royal Bank and CIBC will boost dividends this time around.

"The thing is that now we have had the U.S. stress tests come out for the banks and they have let them start raising dividends and that was the catalyst that everybody was really waiting for," added Cieszynski.

Bank of Montreal hands in results Wednesday, CIBC, National Bank and TD Bank report the following day and Royal Bank releases earnings on Friday. Scotiabank will report earnings on May 31.

Meanwhile, the TSX snapped a losing streak of three negative weeks in a row last week, gaining 275 points or two per cent on the week.

The showing leaves the TSX up for the year but down sharply from early April highs of around 14,300.

Prior to that, indexes had moved pretty much straight up since last August, when U.S. Federal Reserve chairman Ben Bernanke vowed the central bank would do whatever was necessary to keep the economic recovery on track.

Investors have been worried that economic conditions are softening somewhat, particularly in the United States.

The resource-heavy Toronto market has also been under pressure by volatility in commodity markets as investors wonder how Chinese government attempts to slow China's economy to cool inflation will pan out.

But metal and oil prices have also been caught up in much volatility after oil prices surged more than 30 per cent to almost US$115 as a risk premium was slapped on crude in the wake of unrest across several Mideast countries, which also attracted a large speculative element.

Oil prices have since tumbled to around US$100 on demand concerns.

And many analysts think oil has no business at that level.

"If the U.S. economy continues to drag along, no it doesn't," Cieszynski said.

"The reality is the huge run-up was mostly based on political speculative trading because of the huge amount of liquidity in the system. All this money had to find its way somewhere...some of it found its way into the stock market, some of it found its way into the crude oil market."

But commodity prices also turned volatile earlier this month after silver soared to almost US$50 an ounce from under US$30 at the beginning of the year. Margin requirements for silver were boosted several times by futures and options marketplace giant CME Group, which in turn depressed other commodities and equities as investors scrambled to meet margin calls.

Cieszynski does not think the market is heading toward a dramatic correction in the 20 per cent range but he does believe the market could trade slightly lower or sideways until well into the summer.

"Most of the correction is probably worked out, we could still see some downside from here just because we're in a seasonal period and the reality is it takes awhile for these things to work themselves out completely," he said.