TSX Futures Edge Lower as Oil Prices and Bond Yields Rise

The S&P/TSX Composite Index edged higher above 35,000 on Thursday, supported by gains in the energy and related industrial services sectors. Oil prices surged on reports that the US is planning new strikes against Iran, risking the recent rebound in Middle Eastern oil exports. Energy producers gained, with Canadian Natural, Suncor and Imperial Oil up about 2% each, while Cenovus added nearly 3%. Enbridge, Waste Connections and TC Energy rose about 1% each. Most gold miners edged higher as gold prices posted modest gains after falling in the prior session, with Agnico Eagle and Franco-Nevada up more than 0.5%. Global yields also extended their rally amid intensifying inflationary pressures from high oil and fuel prices and a hawkish US Federal Reserve backdrop. Financials posted losses, with RBC and BMO down nearly 1%, while TD Bank and CIBC fell about 0.5%.

Futures linked to Canada’s stock market edged lower on Thursday amid strains in global bond markets and a surge in oil prices. Oil prices surged on reports that the US is planning new strikes against Iran, risking the recent rebound in Middle Eastern oil exports and intensifying inflationary pressures. Global yields also extended their rally as a hawkish US Federal Reserve’s s backdrop worsened the outlook for credit-sensitive stocks. Meanwhile, uncertainty over US-Canada trade ties persisted, with US President Donald Trump suggesting that Canada has not been easy to deal with, casting doubt over the potential for a new trade deal. On the other hand, gold prices rebounded slightly, offering some respite to mining stocks that have been under pressure amid falling prices.

The S&P/TSX Composite Index fell 1.7% to close at 35,042 on Wednesday as concerns over high bond yields returned to the forefront, threatening earnings projections for credit-sensitive sectors. Oil prices softened from earlier gains, easing inflation concerns. Still, tight credit conditions persisted, and US Fed FOMC members agreed that higher rates are needed to tame inflation, according to the latest meeting minutes. Canadian sovereign bonds fell, further pressuring credit-sensitive stocks. RBC shed 2.3%, while TD Bank lost 3.3%. Markets are pricing in at least one 25-basis-point Bank of Canada rate hike by year-end. Meanwhile, gold prices declined, weighing on miners, with Agnico Eagle down 2.8% and Barrick losing 3.6%. Energy producers also erased earlier gains amid the oil pullback, with Imperial Oil down 2% and Cenovus losing 1.8%.