TSX Futures Fall on Iran War Escalation

The S&P/TSX Composite Index edged lower to trade below 34,500 on Wednesday, reflecting a broader risk-off tone as tensions in the Middle East escalated. The US struck targets in Iran in retaliation for an attack on a helicopter near the Strait of Hormuz, while Iran responded with strikes on US bases in Kuwait and Bahrain. Meanwhile, the Bank of Canada held interest rates steady as expected, citing mixed domestic economic signals, though markets continue to expect a 25bps rate hike by year-end. Financial stocks were broadly weaker, with Brookfield slipping nearly 1%. Technology shares also remained under pressure amid fading enthusiasm around AI, with Shopify down almost 2%. Mining stocks declined as gold prices eased, with Agnico Eagle and Wheaton Precious Metals losing around 2% and Barrick Gold falling 1.5%. In contrast, energy stocks outperformed, supported by higher crude prices. Canadian Natural and Suncor each gained about 1%, while Cenovus advanced more than 1.5%.

Futures tracking the S&P/TSX Composite Index fell on Wednesday, weighed down by escalating tensions in the Middle East. The US struck targets in Iran in retaliation for an attack on a helicopter near the Strait of Hormuz, while Iran launched attacks on US bases in Kuwait and Bahrain. The renewed exchange of strikes threatened prospects for a deal to end the conflict and reopen the Strait. Oil prices rose in response, fueling concerns about inflation and a more hawkish Bank of Canada, weighing on banks and the broader index. Meanwhile, gold prices fell on expectations of tighter US monetary policy, pressuring mining shares. Technology stocks also remained under pressure amid fading enthusiasm for AI. Investors are awaiting the Bank of Canada's policy decision, with the central bank expected to keep rates unchanged.

The S&P/TSX Composite Index fell 0.2% to close at 34,412 on Tuesday, weighed down by losses in the mining, energy, and technology sectors. Mining shares retreated as gold prices declined amid expectations that the Federal Reserve will maintain a hawkish stance. Agnico Eagle shed 1.9%, Barrick lost 1.4%, and Wheaton Precious Metals fell 2.6%. Energy stocks also weakened as oil prices pulled back after Israel and Iran agreed to halt attacks following a renewed flare-up in hostilities. Canadian Natural dropped 3.6%, while Suncor lost 3%. In the tech sector, Shopify fell 0.5% and Celestica lost 4.9% as a wave of equity offerings by companies seeking capital to fund AI ambitions raised concerns about whether demand will be sufficient to absorb the new supply and what that could mean for valuations. Investors also looked ahead to the Bank of Canada's policy decision on Wednesday, with policymakers widely expected to leave interest rates unchanged.