Futures linked to Canada’s primary equity benchmark nudged downward Friday as markets remained sensitive to high crude prices and continuing hostilities related to the conflict in Iran.
By 08:31 ET (12:31 GMT), the S&P/TSX 60 index standard futures contract was down 4 points, or around 0.2%.
That came after the S&P/TSX composite index fell 1.4% to 31,854.98 on Thursday, a close that represented its weakest finish since February. The composite has now relinquished more than 7% since the Iran conflict began in late February.
The pullback reflected mixed forces across Canadian equity sectors. A retreat in gold prices exerted downward pressure on the shares of Canadian-listed gold miners, while higher crude since the start of the Middle East fighting continued to underpin energy equities.
U.S. futures and broad market context
Across the border, U.S. stock futures were also trading lower. As of 07:46 ET, the Dow futures contract was down 151 points, or about 0.3%; the S&P 500 futures were lower by 30 points, or roughly 0.4%; and Nasdaq 100 futures had slipped approximately 150 points, or 0.6%.
Major U.S. indexes weakened in the prior session as a jump in energy prices, combined with warnings from the Federal Reserve about the potential for longer-lasting inflationary pressure, weighed on investor sentiment.
Recent moves in oil and natural gas
The market reaction follows a sequence of attacks and counterattacks in the Middle East that touched key energy infrastructure. An Israeli strike on South Pars, the Iranian sector of what is described as the world’s largest gas field, prompted retaliatory strikes from Tehran across significant energy installations in the region, including a major natural gas production hub in Qatar.
Those actions sent Brent crude prices spiking to about $119 a barrel at one point earlier in the week, and Europe’s regional natural gas benchmark also surged. After the initial escalations, stocks recovered some ground from intraday lows and oil eased from its peaks as the U.S. and Israel attempted to indicate that they would not mount follow-up strikes on South Pars. The White House also signaled plans to ease pressure in energy markets - including the possibility of lifting sanctions on some Iranian oil - as part of efforts to calm markets.
Despite the subsequent pullback from the highs, oil prices remained elevated on Friday amid lingering concerns that supply disruptions resulting from the Iran war could persist.
Brent crude futures were last trading around $107 a barrel, after earlier surging near $119 per barrel following the South Pars episode and Iran’s response. The exchange of strikes on major energy infrastructure has stoked worries that even if naval routes such as the Strait of Hormuz are eventually secured, damage to production and export capacity could keep global supply tight for an extended period.
Qatar production hit and regional ripple effects
Qatar said that damage to its Ras Laffan natural gas facility - struck in Iranian retaliatory operations - reduced its export capacity by 17% and that repairs could take as many as five years. As a major supplier of gas, particularly to Europe, any extended impairment to Qatar’s output contributed to the sharp jump in regional gas benchmarks and added to investor anxiety about upward pressure on inflation in energy-importing economies.
The New York Times reported that Iran continued launching retaliatory strikes, and that countries around the Middle East allied with the U.S. were encountering incoming drones and missiles. The report also said Israel had targeted Tehran following overnight missile alarms sounding in Jerusalem and northern Israel.
Political rhetoric and strategic considerations
In a statement cited by the Wall Street Journal, Iranian Supreme Leader Mojtaba Khamenei said, "safety must be taken away from our domestic and foreign enemies and given to our people." The Journal described the statement as a message of defiance from Khamenei, identifying him as the son of slain former leader Ali Khamenei, and noted it came amid what the paper characterized as systematic Israeli strikes aimed at members of Iran’s ruling regime.
Israeli Prime Minister Benjamin Netanyahu confirmed that U.S. President Donald Trump had asked Israel to refrain from further attacks on Iranian energy infrastructure for the time being.
U.S. officials have been working to calm jittery energy markets. U.S. Treasury Secretary Scott Bessent suggested Washington could release emergency oil reserves and even consider lifting sanctions on some Iranian crude to help ease supply strains. At the same time, U.S. military and allied forces have been involved in efforts to reopen the Strait of Hormuz, according to reporting cited from American military officials. If the waterway risk is reduced, U.S. warships may be able to escort vessels through the Persian Gulf, a key global energy corridor.
Analysts at Vital Knowledge observed that controlling access to the Strait of Hormuz remains central to resolving the current market stress - and that no clear solution exists for fully reopening the waterway without either a major military escalation involving large troop deployments or a diplomatic settlement. They also cited a warning from Saudi Arabia that oil could climb above $180 a barrel if the conflict does not end by April.
Other commentators cautioned that even if Iran’s leverage over the strait is diminished, damage already inflicted on production facilities could continue to constrain global supply.
President Trump pledged to take necessary actions to help cool the crisis and attempted to reassure the public that "it will be over with soon." He added he had no plans to deploy ground troops, though when asked about that possibility he said, "If I did, I wouldn’t tell you."
Central banks and interest-rate posture
Compounding market sensitivity to the geopolitical shock, major central banks including the Federal Reserve, the European Central Bank, the Bank of England, the Swiss National Bank, and the Bank of Japan all chose to hold policy rates steady this week. Policymakers said they preferred to assess the economic and inflationary fallout from the conflict further before making additional adjustments.
That collective pause, set against the backdrop of an energy-driven inflation impulse, contributed to investor reassessments of the timing for potential rate cuts and helped temper positioning in rate-sensitive asset classes.
Gold and currency moves
Gold prices were trading with modest gains in European hours on Friday but remained on track for sizable weekly losses. The yellow metal had fallen on Thursday after several central banks warned about the inflationary consequences of the Iran war, a development that reduced expectations for near-term interest rate cuts - a dynamic that typically weighs on bullion.
Some support for gold came from a softer U.S. dollar, which was headed for its first weekly loss in three. The greenback weakened against several developed-market currencies after central banks signaled a readiness to raise rates in response to higher energy costs.
Corporate note - FedEx
In company news that intersected with broader transport and energy dynamics, FedEx raised its full-year profit outlook after reporting fiscal third-quarter profit and revenue that exceeded expectations. The logistics provider credited solid demand over the holiday period for the stronger performance.
While the updated forecast assumes no additional disruptions from the geopolitical tensions, FedEx warned that higher air freight costs and flight rerouting tied to the Iran war could hurt returns in the current quarter. Chief Financial Officer John Dietrich told Reuters that the company had not seen jet fuel supplies disrupted by the fighting.
Shares of FedEx rose more than 9% in premarket U.S. trading following the results and guidance revision.
Bottom line
Market participants remain focused on the interplay between elevated energy prices driven by Middle East hostilities and central banks' measured policy stances. In Canada, this has translated into a continued divergence among sectors - with energy stocks benefiting from higher crude while precious-metals miners face headwinds from weaker gold. U.S. markets reflected similar sensitivities, with futures tracking changes in oil and broader risk sentiment ahead of further policy clarity from global central banks.