Futures linked to Canada’s primary stock gauge ticked lower on Thursday as traders weighed the economic and inflationary consequences of a fresh flare-up of hostilities in the Middle East.
At 06:54 ET (10:54 GMT), the S&P/TSX 60 index standard futures contract was down 3 points, or about 0.2%.
That followed a weak session on Wednesday for the Toronto Stock Exchange, where the S&P/TSX composite index closed 1.0% lower at 34,935.80. The drop marked the benchmark’s steepest single-day decline since June 5 and took the index to its lowest closing level since June 30.
Sector performance on Wednesday showed the index’s heavyweights under pressure: financial stocks fell 1.9% and the technology sector slipped 0.7%. Those declines were partially offset by strength in energy shares, which jumped 3.8% in step with rising oil prices.
U.S. equity futures showed mixed direction early Thursday. By 07:09 ET, Dow futures were off roughly 85 points, a decline of 0.2%, while S&P 500 futures were higher by 12 points, or 0.2%. Nasdaq 100 futures were firmer by about 176 points, or 0.6%.
The prior trading session ended with divergent results across major U.S. averages: the Dow Jones Industrial Average fell 1.1%, the S&P 500 lost 0.3% and the Nasdaq Composite gained 0.2%.
Investor nerves were shaken after U.S. President Donald Trump said the interim ceasefire with Iran was "over." The renewed fighting followed recent U.S. strikes on Iranian targets and retaliatory attacks by Tehran, prompting concerns that further escalation could disrupt oil shipments through the Strait of Hormuz.
Energy markets were volatile as the geopolitical backdrop influenced flows. By 07:21 ET, Brent crude futures, the global benchmark, had climbed 0.9% to $78.68 a barrel. U.S. West Texas Intermediate crude futures were up 0.8% at $74.05 a barrel. Both contracts had jumped more than 8% on Wednesday, leaving prices higher than earlier in the week.
Precious metals moved higher as well. Spot gold rose 0.6% to $4,101.14 an ounce, and gold futures were up 0.7% at $4,110.30 an ounce by 07:35 ET. The metal received some support after release of the Federal Reserve’s June meeting minutes, which left open the possibility that policymakers had weighed a rate increase in June while also debating potential easing in months ahead.
Analysts noted that higher interest rates generally weigh on non-yielding assets like gold because they raise the opportunity cost of holding such assets. Nevertheless, the Fed minutes also reflected growing unease among central bankers about persistent inflation. U.S. price growth has climbed since the onset of the U.S.-Iran conflict in late February and remains well above the Fed’s 2% annual objective.
Against this mix of geopolitical risk and central bank uncertainty, markets appeared to be parsing competing forces: oil and energy stocks benefitted from supply concerns, while financials and technology names felt pressure amid a broader risk-off tilt.