Market open
Futures linked to Canada's principal stock index advanced on Wednesday as traders digested President Donald Trump's announcement that a ceasefire with Iran would be extended indefinitely, while also weighing continued interruptions to oil flows through the Strait of Hormuz.
By 07:48 ET (11:48 GMT), the S&P/TSX 60 index standard futures had risen by 12 points, or 0.6%.
Recent Toronto losses
On Tuesday, Toronto Stock Exchange's S&P/TSX composite index plunged by 551.73 points, or 1.6% - marking the largest single-day drop for the index since March 20. That decline set a lower starting point for futures trade on Wednesday as investors reacted to the latest geopolitical developments.
U.S. futures and timing
U.S. stock futures were also higher in early trade. By 07:15 ET (11:15 GMT), the Dow futures contract had risen by 228 points, or 0.5%, S&P 500 futures were up by 36 points, or 0.5%, and Nasdaq 100 futures had climbed by 180 points, or 0.7%.
Trump's declaration that the ceasefire would be extended indefinitely arrived after the close of U.S. markets on Tuesday, and Wall Street's main averages had ended the session lower amid uncertainty about renewed talks between the U.S. and Iran.
Events in the Strait of Hormuz
On Wednesday, three ships were reported attacked near the Strait of Hormuz. Iranian state media said the paramilitary Islamic Revolutionary Guards Corps struck a ship in the strait and described the vessel as "stranded" on the Iranian coast. The U.K. Maritime Operations shipping monitor said a separate container ship in the waterway was attacked shortly after a boat linked to the Revolutionary Guards struck another vessel in the area. Iranian state media additionally reported that the Revolutionary Guards seized these two vessels.
President Trump has said that an ongoing U.S. blockade of Iranian ports and coastline will remain in place - a measure Iran's foreign minister has characterised as an "act of war" - and Trump argued that Iran is "collapsing financially!" and wants the strait to be "opened immediately" because Tehran is "Starving for cash."
Tanker traffic through the Strait of Hormuz - a crucial route off Iran's southern coast through which roughly a fifth of the world's oil travels - has been all but closed since the start of the war in late February.
Commodities: oil and gold
Oil prices moved higher on Wednesday, with Brent crude futures, the global benchmark, trading just below $100 a barrel. The jump in crude relative to pre-war levels has raised concerns that higher fuel costs could add to inflationary pressure, potentially slowing global growth and prompting central banks to raise interest rates.
Gold also edged up, recovering some ground after losses in the prior session. The metal had faced pressure after Federal Reserve Chair nominee Kevin Warsh told a Senate hearing that he had not promised President Trump he would cut interest rates if confirmed. Supporting bullion was relative softness in the U.S. dollar, which can make gold less expensive for overseas buyers; an index tracking the greenback against six currencies was last lower by 0.1%.
The dollar surged in March as investors sought a safe haven amid concerns that strong U.S. energy exports would help shield the American economy from an energy shock tied to disruptions in the Strait of Hormuz. The currency has since moved back toward pre-war levels, with some market participants suggesting the peak of the geopolitical shock may have passed.
Corporate earnings and market movers
Traders were also sorting through a heavy slate of U.S. corporate earnings for signs of how the Iran conflict may be affecting company results. United Airlines shares rose in premarket U.S. trading as market relief around Trump's ceasefire extension helped offset fallout from disappointing second-quarter and full-year profit figures.
Analysts cited by Reuters said United's weaker guidance was driven largely by higher fuel costs, and that the carrier's underlying operational performance, excluding fuel expenses, was generally in line with expectations. Rising jet fuel prices linked to the conflict have the potential to squeeze airline margins even as travel demand remains resilient.
Other premarket moves included gains for GE Vernova after the power equipment manufacturer raised its annual revenue forecast. Telecom major AT&T climbed on better-than-expected wireless subscriber additions in the first quarter. Planemaker Boeing also rose after reporting a quarterly loss that was smaller than analysts had estimated.
Investors were also watching Tesla, with the company's earnings due after markets close; Tesla's shares were slightly higher in premarket trade.
Market context and watchlist
Equity futures in Canada and the United States were attempting to price in both the diplomatic development of an extended ceasefire and the tangible disruptions to energy shipments in the Gulf. Commodity price moves - notably the rise in crude near the $100 mark and the modest recovery in gold - remain key variables that could influence inflation expectations and, in turn, central bank policy considerations.
Meanwhile, corporate earnings from a range of sectors - airlines, power equipment, telecoms, aerospace, and electric vehicles - were providing a nearer-term lens on profit margins, cost pressures such as fuel, and consumer or business demand trends.
What to watch next
- How equity futures and cash markets react to any further updates on the ceasefire or additional incidents in the Strait of Hormuz.
- Movements in Brent crude and jet fuel prices, given their implications for inflation and corporate cost structures, especially in transportation and industrial sectors.
- Quarterly reports from major U.S. corporations that could signal whether the conflict is materially affecting revenue and margins.