TSX Slips on Renewed Middle East Concerns

The S&P/TSX Composite Index fell from its record yesterday to 34,000 on Tuesday as hopes for a resolution to the Middle East conflict faded following US military strikes in Iran. The latest attacks renewed uncertainty over when the Strait of Hormuz could reopen, reviving concerns about prolonged inflation and higher-for-longer interest rates. Gold prices declined, weighing on mining stocks, with Agnico Eagle down 1.7%, Barrick losing 1%, and WPM falling 2.6%. Meanwhile, major banks were muted ahead of their earnings this week, set to update balance sheets for the TSX's biggest sector. Elsewhere, Manulife Financial gained 0.2% after launching a 10-year Singapore dollar-denominated subordinated Tier-2 bond with a five-year non-call period. Markets also monitored the first round of formal negotiations over the US-Mexico-Canada trade agreement.

Futures tracking the S&P/TSX Composite Index edged lower on Tuesday as hopes for a resolution to the Middle East conflict faded following fresh US military strikes in Iran. The latest attacks renewed uncertainty over when the Strait of Hormuz could reopen. Gold prices also fell as concerns about prolonged inflation and higher-for-longer interest rates resurfaced, pressuring mining shares and the broader index. Investors awaited quarterly earnings from major Canadian banks, with RBC and TD Bank set to report on Wednesday and Thursday, respectively, while BMO, Scotiabank, and NBC are also due to release results on Wednesday. Elsewhere, Manulife Financial launched a 10-year Singapore dollar-denominated subordinated Tier-2 bond with a five-year non-call period. Markets also monitored the first round of formal negotiations over the US-Mexico-Canada trade agreement.

The TSX/S&P Composite Index rose 1% to close at a record 34,831 on Monday, on signs that the US and Iran were negotiating an end to their conflict. Reports are that Iran would move to reopen the Strait of Hormuz during a 30-day window following an agreement, while the ceasefire reached in early April would be extended by 60 days, with talks on Iran’s nuclear program planned during the two-month pause. Oil prices fell, easing inflation concerns and lowering bond yields, supporting the financial sector. Results from banks, including RBC (+0.8%), TD Bank (+1.2%), and BMO (+0.9%) are due this week. Mining stocks also advanced as gold prices climbed, with Agnico Eagle gaining 4.6%, Barrick rising 4.2%, and WPM adding 5.6%. Meanwhile, energy stocks were the main laggards, declining alongside the pullback in oil prices, as Canadian Natural fell 3.6% and Suncor lost 3%. On the trade front, the first round of formal negotiations for the US-Mexico-Canada free trade agreement has begun.