Overview
Futures tied to Canada’s primary stock index were slightly higher on Tuesday as oil prices continued to trade above $100 a barrel amid ongoing fighting in the Middle East. At 08:26 ET (12:26 GMT), the S&P/TSX 60 index standard futures contract had gained 5 points, or roughly 0.3%.
Canadian equity benchmarks had registered a solid advance on Monday, with the main index climbing 1.03% to 32,876.65. That move marked the largest single-day increase for the average since the launch of the joint U.S.-Israeli assaults on Iran in late February. A retreat in oil the session prior had eased some immediate risk concerns and supported greater appetite for risk assets, notably metal mining shares - an important segment of the commodity-tilted TSX.
Global risk tone and central bank calendar
Investors continue to monitor upcoming policy decisions from the Federal Reserve and the Bank of Canada later this week, seeking clearer signals on how monetary authorities may respond if energy-driven inflationary pressures intensify as a result of the Iran conflict. The cluster of central bank meetings has heightened attention on how policymakers will balance inflation risks against economic conditions.
U.S. stock index futures also moved higher after earlier weakness, following the advance on Wall Street in the previous session. By 08:39 ET, Dow futures were up 162 points, or about 0.3%, S&P 500 futures had risen 17 points, or 0.2%, and Nasdaq 100 futures had improved by 35 points, or 0.1%.
Market participants on Monday had been encouraged by the prospect that an international coalition could assist U.S. efforts to reopen the Strait of Hormuz - a crucial maritime chokepoint through which roughly one-fifth of the world’s oil supply transits. Public statements from the U.K. and France indicated a willingness to discuss options with Washington, while several other U.S. allies declined to join requests for assistance, a split that underscores geopolitical uncertainty around securing tanker traffic.
Crude markets remain elevated
Brent crude futures were trading at $102.69 a barrel by 08:50 ET, up about 2.5% on the day, while West Texas Intermediate futures had rallied roughly 3.0% to $95.25 a barrel. The price of oil has risen sharply since late February - increasing by more than 40% since the start of the joint U.S.-Israeli military actions targeting Iran.
Early Tuesday, a projectile struck a tanker anchored near a port in the United Arab Emirates. According to a report that cited the United Kingdom Maritime Trade Operations Center, the vessel, which was near Fujairah at the southern end of the strait, sustained only minor damage. UAE officials separately said a drone sparked a fire at a key oil industry facility, adding to concerns about already tight global supplies.
Those developments have reinforced worries that a prolonged conflict could produce an energy shock, raising inflationary pressures worldwide and prompting central banks to reconsider interest rate paths.
Central banks, commodity prices and policy implications
Monetary authorities are responding in real time to the combination of elevated energy prices and geopolitical risk. On Tuesday, the Reserve Bank of Australia moved rates to a 10-year high, explicitly warning of "material" inflation risks tied to the Iran conflict. Other major central banks - including the Federal Reserve, the European Central Bank and the Bank of Japan - are also scheduled to convene this week, creating the potential for heightened volatility across equities, commodities and currencies.
"[C]entral banks face a complex balancing act," Lukman Otunuga, Senior Market Analyst at FXTM, said. "Conflict-driven inflation risks could force policymakers to reassess their outlook for 2026, especially as markets rapidly dial back expectations for interest rate cuts. With major central bank decisions due this week, traders should brace for heightened volatility across equities, commodities and currencies."
Geopolitical moves and diplomatic friction
On the diplomatic front, the U.S. administration has sought support from international partners. The U.S. president has asked that a planned meeting with China’s leader next month be delayed, after warning that he might postpone the meeting if Beijing did not exercise its influence to help reopen the Strait of Hormuz. Over the weekend, he called on China to deploy its navy to secure the waterway. Beijing, which imports Iranian oil, has limited incentive to take direct action and Tehran has permitted Chinese tankers to transit the strait while warning it could attack vessels carrying goods that might benefit the U.S. or its allies.
There have also been reports of high-profile casualties related to the conflict. Israeli officials said that Iran’s security chief, Ali Larijani, was believed killed in air strikes on Monday, and that Iranian state media would publish a statement from Larijani soon. Other reports named Gholamreza Soleimani, commander of Iran’s Basij paramilitary unit, as another figure killed. There has been no confirmation of those deaths from Iranian officials or state-backed media.
Corporate news and earnings to watch
Beyond geopolitics and monetary policy, corporate developments are also influencing market tone. Investors were preparing for earnings releases from electronic signature specialist DocuSign and apparel retailer Lululemon Athletica after the U.S. market close. Those reports will provide fresh data points for market participants assessing demand trends and company-specific unit economics.
Semiconductor heavyweight Nvidia is engaging with analysts during its developers conference. CEO Jensen Huang projected the company would reach $1 trillion in artificial intelligence chip sales by the end of 2027, relative to $500 billion outlined for the current year. Huang also emphasized the importance of AI inference, calling it "the AI future." These remarks have implications for the semiconductor sector and for investor expectations around AI-driven revenue growth.
Airline equities have also reacted to company-level guidance: shares of Delta Air Lines jumped in U.S. premarket trade after the carrier said it expects earnings per share to remain within its prior guidance range, citing robust revenue performance that offsets higher fuel costs.
Precious metals and safe-haven flows
Gold traded higher in Asian hours as focus remained on oil prices, the conflict involving the U.S. and Israel against Iran, and the impending cluster of central bank meetings. The metal had briefly dipped below $5,000 an ounce in the prior session but has generally traded within a $5,000-$5,200 per ounce band over the past three weeks. While safe-haven demand has supported bullion, that effect has been partly countered by concerns that rising energy-driven inflation could erode the metal’s real return, and by strength in the U.S. dollar which makes bullion less attractive for holders of other currencies.
Market attention is turning to the Federal Reserve meeting on Wednesday, where policy is widely expected to be left unchanged amid uncertain inflation dynamics related to the Iran conflict. The Bank of Canada will meet on the same day, while the Bank of Japan, Swiss National Bank, Bank of England and European Central Bank are scheduled to make rate decisions on Thursday.
Market implications
With elevated oil, ongoing geopolitical risk, a packed central bank calendar and corporate catalysts, market participants are positioning for increased volatility across commodity-linked sectors, financials and technology names tied to AI demand. The interplay of higher energy costs and central bank responses will be a key determinant of near-term asset price moves.