Futures connected to Canada’s main equity gauge nudged higher on Thursday as market participants focused on mounting signs that negotiations between the United States and Iran may lead to a lasting halt in hostilities.
By 08:33 ET (12:33 GMT), the S&P/TSX 60 index standard futures contract had advanced by 5 points, or roughly 0.3%. The broader S&P/TSX composite index had already notched gains on Wednesday, rising 0.2% to close at 34,155.99 - its strongest settlement since March 2.
Sector returns were mixed as investors weighed the diplomatic developments. Heavily weighted financial names pushed up by about 0.9%, providing broad support to the market, while energy stocks slipped as oil retreated from recent peaks amid optimism that a diplomatic breakthrough could ease supply disruptions.
U.S. futures and equity backdrop
Across the border, U.S. equity futures traded higher on Thursday following a session in which the S&P 500 and the Nasdaq Composite closed at fresh record highs. At 08:36 ET, S&P 500 futures were up approximately 0.2%, Nasdaq 100 futures rose about 0.2%, and Dow Jones futures were higher by some 0.3%.
On Wednesday, the benchmark S&P 500 climbed roughly 0.8% to settle above the 7,000 level for the first time since late January, while the Nasdaq Composite gained about 1.6% to reach an all-time high, led by technology and software stocks. The blue-chip Dow Jones Industrial Average was slightly lower on the day.
Investors said the recent rally was supported by growing belief that Washington and Tehran could resume talks, which in turn reduced near-term concerns about prolonged interruptions to global energy supplies. That improvement in sentiment has helped offset fears that an extended energy shock would stoke inflation and complicate central bank policy decisions.
Diplomatic developments and lingering frictions
Mediators have continued efforts to secure a permanent cessation of hostilities between the U.S. and Iran as a temporary two-week ceasefire approaches its scheduled end later this month. Reports indicate that both sides have agreed in principle to hold further talks after an initial round in Pakistan did not produce an immediate agreement, although no date or location has been set for the next meeting.
According to reporting citing officials familiar with the matter, the United States and Iran have signaled willingness to hold additional negotiations. Vice President JD Vance has been named as the expected leader of the U.S. delegation for any follow-up discussions, should they be scheduled.
Still, signs of friction persist. A prominent Iranian military commander warned the United States against continuing a naval blockade of Iranian ports. U.S. Central Command has asserted that no Iranian-linked commercial vessels or oil tankers have evaded the blockade, indicating continued tension over maritime operations in the region.
Energy markets and the Strait of Hormuz
Oil prices moderated from recent highs, trading below the $100-per-barrel mark while remaining substantially above pre-conflict levels. Traders continue to evaluate the potential impact of a sustained closure of the Strait of Hormuz - the strategic waterway off Iran's southern coast through which roughly a fifth of the world’s oil flows - which has been effectively closed to tanker traffic for weeks and has tightened global energy supplies.
Market participants noted that a prolonged disruption in shipments through the Strait would continue to exert upward pressure on crude prices, whereas progress toward a diplomatic settlement could relieve some of that pressure and dampen energy-market driven inflation risks.
Safe havens and currency moves
Precious metals responded to the shifting sentiment. Spot gold inched higher by about 0.4% to $4,808.42 an ounce, while gold futures were up roughly 0.1% at $4,828.71 per ounce by 06:14 ET (10:14 GMT). Traders cited a softer U.S. dollar and the possibility of additional ceasefire talks as factors supporting demand for non-yielding gold.
Analysts pointed out that upbeat language around negotiations has reduced some market expectations for inflation-induced central bank rate increases, which can make gold more attractive. At the same time, a weaker greenback can improve the appeal of dollar-priced gold to overseas buyers.
Corporate reports and executive commentary
Corporate earnings continued to provide color for markets. Before the opening of trading on Thursday, PepsiCo reported first-quarter results that beat analyst expectations, with the company's shares trading slightly higher in premarket activity. The beverage and snacks group cited continued strength in energy drinks and sodas, and noted that price reductions on some snacks introduced in February helped underpin U.S. demand.
PepsiCo's chief financial officer, Steve Schmitt, cautioned that the broader macroeconomic backdrop had become more volatile due to "ongoing geopolitical conflicts." Other quarterly results were released from companies including Abbott Laboratories and Travelers Companies. Streaming giant Netflix was scheduled to report its quarterly results after the bell later in the day.
Separately, a number of senior executives from major U.S. banks have characterized the American economy as largely resilient to an energy shock stemming from the effective closure of the Strait of Hormuz, even as they monitor potential risks to growth and loan performance should an energy supply squeeze persist.
Market caution and the durability of the rally
Despite the favorable market reaction to the prospect of renewed talks, some analysts warned that the influence of repeatedly positive reports about a U.S.-Iran peace accord could diminish over time. Analysts at Vital Knowledge suggested that as a resolution to unrest in the Middle East becomes more of a consensus expectation, it may cease to be a major source of upward pressure on equities.
For now, investors remain alert to developments that could reintroduce volatility - from fresh diplomatic setbacks to renewed maritime frictions - even as the current mix of softer oil, firmer financials, and modest gains in safe-haven assets shapes positioning across North American equity markets.
What to watch next
- Any formal scheduling of further U.S.-Iran talks, including venue or timing details.
- Near-term price movements in oil and gold as markets digest diplomatic and shipping developments.
- Quarterly results from major corporates, including scheduled reports such as Netflix following the close, and their guidance for demand in an uncertain geopolitical backdrop.