TSX Pares Tuesday's Sharp Drop

Futures tracking the S&P/TSX Composite Index were higher on Wednesday as global markets rallied after US President Trump signaled a possible swift resolution to the Middle East conflict. On Tuesday, Trump and Secretary of State Marco Rubio indicated the conflict with Iran may be nearing an end, hinting at direct engagement with Iranian leaders and a de-escalation of hostilities even without a formal agreement. Oil prices, which had rallied since the conflict began, fell sharply, easing fears of energy-driven stagflation. Lower bond yields reduced worries over credit activity and supported financial stocks, while lower oil prices weighed on energy producers. Meanwhile, gold extended its climb as the dollar softened following Trump's de-escalation signals, lifting mining stocks. Furthermore, the TSX logged a 4.6% decline in March, its steepest monthly drop since May 2023, though it ended the first quarter up 3.3%, extending its run of quarterly gains to seven.

The S&P/TSX Composite Index surged 2.6% to close at 32,768 on Tuesday as a wave of optimism regarding a potential diplomatic end to the Middle East conflict sparked a broad rally in risk assets. While the benchmark recovered significant ground in the final session it concluded March with a decline of 4.6% marked by the fifth consecutive week of war-related volatility. The technology sector notably underperformed during the quarter with the info tech subindex tumbling over 26% as capital rotated into energy producers amid soaring crude prices. Tech darling Shopify saw a daily gain of 6%, yet remains down nearly 30% for the year due to AI-related disruption fears and the ongoing regional instability. Domestic sentiment drew additional support from preliminary GDP data reflecting a third consecutive monthly expansion in February alongside strong gains in the financial sector. Royal Bank of Canada and TD Bank rose 2.3% and 1.9% respectively while Agnico Eagle Mines surged 5.8%.

The S&P/TSX Composite Index rose over 1% to above the 32,300 mark on Tuesday, as the final trading session of March brought a wave of optimism following reports that US President Donald Trump is considering an end to military hostilities in the Middle East. While the Strait of Hormuz remains largely blocked and crude oil prices captured over $1.00 to trade near $104 per barrel the prospect of a diplomatic resolution sparked a broad rally in risk assets. Domestic data further bolstered sentiment as preliminary data reflected a third consecutive expansion in the Canadian GDP in February. The expansion was notably reflected in the financial sector with Royal Bank of Canada gaining around 1% and TD Bank rising over 1.5% while the mining sector drew support from a jump in gold prices. Despite this late month recovery the benchmark index is set to conclude March with a decline of roughly 6% as the five week conflict continues.