TSX Trades Muted Amid Geopolitical Uncertainty

The S&P/TSX Composite Index traded flat at over 33,650 on Thursday as escalating Middle East tensions and uncertainty over the Strait of Hormuz’s reopening lifted oil prices. US President Trump warned of potential major escalation in the conflict with Iran should peace talks falter, affirming that US military assets will remain deployed until a deal is secured. Oil prices surged, reigniting inflation fears amid supply-shock concerns, lifting bond yields and reviving worries about weaker credit demand and possible rate hikes, pressuring financial stocks. The Royal Bank of Canada and Brookfield both edged lower. Conversely, higher oil and gold prices buoyed energy and mining shares: Canadian Natural Resources rose over 1%, Suncor Energy gained nearly 1%, Agnico Eagle climbed more than 1%, Barrick rose close to 1%, and Wheaton Precious Metals advanced nearly 2%.

Futures tracking the S&P/TSX Composite Index edged slightly lower on Thursday on escalating Tensions in the Middle East, while uncertainty over the reopening of the Strait of Hormuz pushed oil prices higher. US President Trump warned of potential major escalation in the conflict with Iran if peace talks fail, noting that US military assets will remain deployed in the region until a deal is secured. Oil prices surged, reigniting inflation concerns amid fears of a supply-driven shock, which in turn lifted bond yields and revived worries about weaker credit demand and potential rate hikes, weighing on banking stocks. Conversely, higher oil and gold prices provided a tailwind for energy and mining sectors.

The S&P/TSX Composite Index surged over 1.5% to above the 33,700 level on Wednesday as a diplomatic breakthrough in the Middle East fueled a global risk asset market rally. President Trump announced a two-week conditional ceasefire that includes reopening the Strait of Hormuz which eased stagflation fears and lowered bond yields. This shift supported financial giants like RBC and TD Bank adding over 2% while tech leader Shopify gained nearly 7% as credit concerns diminished. Gold prices advanced to near three-week highs amid the reassessment of global risks pushing Agnico Eagle and Barrick Gold over 5% higher. Mining stocks also benefited from base metal strength with Lundin Mining and First Quantum posting gains above 9%. Conversely the energy sector faced heavy selling pressure as WTI crude plunged below $95 per barrel resulting in sharp retreats for Canadian Natural Resources, Suncor Energy, and Imperial Oil losing over 6%.