Futures linked to Canada’s primary stock index moved lower on Thursday as market participants processed a fresh rally in oil prices, weaker gold, and a series of central bank interest rate decisions. By 07:38 ET (11:38 GMT), the S&P/TSX 60 index standard futures contract had slipped by 14 points, or 0.8%.
Equity momentum on the Toronto Stock Exchange had already been negative the previous session: the S&P/TSX composite index fell 1.87% to 32,312.67 points on Wednesday. That decline was driven in part by renewed inflation warnings from the Bank of Canada. The BoC left its policy rate unchanged as expected, but Governor Tiff Macklem emphasized the central bank's readiness to raise borrowing costs if fresh inflation pressures materialize.
Gold's retreat after a similar Federal Reserve decision dented metal-mining stocks, dragging the TSX's materials index lower and offsetting gains in the energy sector. The interaction between rising energy prices and falling precious metals created a cross-current across Canadian market subsectors.
U.S. futures and Wall Street reaction
U.S. stock futures were also pressured by the jump in global oil prices, which accelerated after a wave of attacks struck critical energy infrastructure across the Middle East. By 06:43 ET (10:43 GMT), Dow futures had dropped by 67 points, or 0.2%, S&P 500 futures had declined by 12 points, or 0.2%, and Nasdaq 100 futures had fallen by 74 points, or 0.3%.
Equities on Wall Street posted sharp losses in the prior session. The main averages slid after a strike on the South Pars gas field - the Iranian portion of the world’s largest natural gas deposit - and subsequent retaliatory strikes on gas facilities in Qatar and Saudi Arabia. Those developments raised the prospect of a widening regional confrontation involving Iran and the combined forces of the U.S. and Israel.
Energy prices spiked following the South Pars attack, intensifying investor concern about a potential pickup in inflationary pressures globally. Market participants were also closely watching a string of central bank policy decisions to glean how policymakers view near-term price dynamics and the implications for borrowing costs.
Adding to the inflation worries, U.S. producer price inflation for February came in hotter than expected, suggesting inflationary forces were present in the U.S. economy prior to the recent outbreak of hostilities in the Middle East. By the end of the trading day, the blue-chip Dow Jones Industrial Average had declined 1.6%, the S&P 500 had fallen 1.4%, and the Nasdaq Composite had dropped 1.5%.
Oil and gas surge
Brent crude futures, the global benchmark, climbed sharply, trading well above $112 a barrel. By 07:06 ET, Brent had risen 6.0% to $113.87 per barrel. U.S. West Texas Intermediate (WTI) futures also advanced, up 0.9% to $96.25 a barrel. The difference between WTI and Brent widened to its largest gap in more than a decade, a gap that market participants attribute in part to the release of U.S. strategic reserves.
European gas benchmarks jumped roughly 25% after Iranian strikes hit Ras Laffan in Qatar, the world’s largest liquefied natural gas production complex. Ras Laffan alone accounts for a substantial share of global LNG output, and the hits to its facilities intensified concerns about energy supply disruptions.
Analysts at ING described the decision to strike Iranian energy assets as an unusual development, noting it came despite U.S. efforts in recent weeks to ease upward pressure on oil prices. President Donald Trump denied U.S. or Qatari involvement in the South Pars strike and instead attributed the bombardment to Israel.
The fresh attacks on energy infrastructure compounded an already difficult backdrop for oil markets, which have been contending with effectively reduced passage through the Strait of Hormuz. Roughly one-fifth of global oil transits that narrow waterway south of Iran, but safety concerns and the risk of Iranian attacks have constrained vessel movements through the channel.
There were few signs that the three-week-old conflict was de-escalating. White House officials were reported to be considering sending thousands of additional U.S. troops to bolster operations in the Middle East.
Against this backdrop, shares in major oil producers showed mixed moves: Chevron and Exxon Mobil were slightly higher after Tehran's retaliatory bombardments of energy facilities across the region. By contrast, companies sensitive to fuel costs saw downward pressure: Delta Air Lines and United Airlines ticked down, and cruise operators Norwegian Cruise Line Holdings and Carnival also retreated.
Federal Reserve, inflation and policy guidance
Despite the sudden jump in oil prices and the risk that energy costs could push consumer prices higher, the Federal Reserve's policy announcement left open the possibility of interest rate reductions later in the year. The Fed held its policy rate steady in a target range of 3.5% to 3.75% as anticipated.
In the Fed's internal projections, 12 of the 19 meeting participants expected at least one rate reduction in 2026, matching outlooks published in December. Some market analysts interpreted the Fed's statement and the updated dot plot as less hawkish than some had feared, with continued expectations for a rate cut in 2026 despite an upward revision to the median inflation forecast.
Capital Economics noted that the Fed's updates reinforced its view that the committee could "look past a short-lived inflation spike," particularly as leadership under the next Fed chair could influence policy direction. However, at his post-decision press conference, Federal Reserve Chair Jerome Powell urged caution in interpreting the projections, suggesting investors should treat the forecasted path of rates with skepticism. He described current rates as a level that neither materially helps nor hinders growth, a position that implies limited room for rate reductions if energy-driven inflation persists.
Gold retreats as real yields rise
Gold slipped below its recent $5,000-$5,200 per ounce trading range following the Fed announcement, as market pricing shifted to reflect a lower likelihood of near-term rate cuts. The CME FedWatch tool indicated that investors were not pricing in rate reductions until at least September, which reduced some of the safe-haven appeal for bullion despite geopolitical tensions.
Analysts at OCBC observed that markets were trading more on concerns that higher inflation risks could delay the Fed's easing path than on geopolitical hedging demand. While safe-haven flows might intermittently support gold, those inflows were being offset by the upward drag from rising real yields.
Corporate earnings spotlight - Micron Technology
On the corporate front, Micron Technology released fiscal second-quarter results showing a year-on-year surge in revenue and a large increase in reported earnings per share. The company posted adjusted EPS of $12.20 for the quarter ended February 26, compared with $1.56 in the prior year, and above analyst forecasts of $8.79. Revenue rose 196% to $23.86 billion from $8.05 billion, surpassing estimates around $19.19 billion. Micron reported a record gross margin of 74.9%, an 18 percentage point sequential increase.
Despite the strong results, Micron shares fell more than 6% in premarket trade after the chipmaker announced plans to spend over $25 billion on new manufacturing facilities in fiscal 2026, roughly $5 billion more than previously expected. Chief Executive Sanjay Mehrotra highlighted the strategic importance of memory in the AI era and said the company was investing in global manufacturing to meet growing customer demand.
Other memory and AI-related semiconductor names were also under pressure: SanDisk and Western Digital shares moved lower, as did AI semiconductor heavyweight Nvidia.
Market implications
The convergence of rising energy costs, shifting central bank signals, and persistent geopolitical risk is producing differentiated effects across market sectors. Energy companies have seen a direct boost from higher oil and gas prices, while travel, transportation and leisure stocks that are sensitive to fuel costs have experienced declines. Precious metals have lost ground amid reassessed expectations for the path of U.S. policy rates.
Investors are monitoring central bank communications this week for further clues on how policymakers will reconcile elevated energy prices with underlying inflation trends. The interaction of supply-side shocks in energy markets and monetary policy guidance will likely shape market positioning in the coming sessions.
What to watch next
- Further developments in the Iran-related strikes and any escalation or de-escalation in the region.
- Additional central bank interest rate decisions and commentary that could clarify the policy outlook for inflation and growth.
- Subsequent corporate updates from energy, materials and technology companies that may reflect the immediate impact of commodity and policy moves.