TSX Muted on Middle East War Uncertainty

The S&P/TSX Composite Index was muted on Thursday, trading near 32,500 as mixed Middle East war signals kept investors on edge. President Trump said Tehran wanted to strike a deal, contradicting Iran's foreign minister, who said his country was reviewing Washington's proposal but had no intention to hold talks. The conflicting signals left market participants uncertain about prospects for restoring Strait of Hormuz flows. Oil prices climbed on concerns that prolonged fighting could further disrupt energy supplies. The oil surge rekindled stagflation worries, lifting bond yields and pressuring credit demand. Despite that, most major banks inched higher: TD and RBC edged up while Brookfield advanced near 1%. Higher oil prices supported energy stocks while lower gold prices pressured miners. Canadian Natural rose 0.2% and Whitecap gained 0.7%, while Barrick fell 1%. Elsewhere, Shopify gained over 1% amid a US software stocks rally.

Futures tracking the S&P/TSX Composite Index fell on Thursday as mixed signals on the Middle East war kept investors on edge. President Trump said Tehran wanted to strike a deal, contradicting Iran's foreign minister, who said his country was reviewing Washington's proposal but had no intention to hold talks. The conflicting signals left market participants uncertain about prospects for restoring flows through the Strait of Hormuz. Oil prices climbed on concerns that prolonged fighting could further disrupt energy supplies. The oil surge rekindled stagflation worries, lifting bond yields and pressuring credit demand and major Canadian banks. Also, the conflict-driven oil rise with no clear end in sight could complicate central banks' rate outlook. In contrast, higher oil prices supported energy stocks while lower gold prices pressured miners. In other news, JPMorgan initiated coverage on Alimentation Couche-Tard with an overweight rating and downgraded TD Cowen to hold from buy.

The S&P/TSX Composite Index surged 1.4% to close at 32,383 on Wednesday as optimism for a diplomatic resolution in the Middle East fueled a broad rally across Canadian equities. Financials remained a primary driver with TD Bank and Bank of Nova Scotia gaining 1.3% and 1% respectively while Royal Bank and Bank of Montreal added 0.6% and 0.9% as falling bond yields supported credit outlooks. Gold miners saw substantial gains with Agnico Eagle jumping 5.2% and Kinross rising 4.3% amid firm bullion prices and a softer US dollar. Technology sentiment was bolstered by Shopify advancing 2.4% while Dollarama added 2% following its recent upgrade. In a notable reversal from earlier sessions energy producers traded in the green despite the daily drop in oil prices with Suncor Energy rising 1.3% and Imperial Oil gaining 1.4%. This resilience helped the benchmark offset declines in the telecommunications sector where BCE and Telus fell around 1%.