Futures connected to Canada’s benchmark stock index moved lower on Monday as financial markets digested a surge in violence across the Middle East that pushed investors away from riskier assets.
By 06:25 ET (11:25 GMT), the S&P/TSX index standard futures contract had fallen 11 points, or roughly 0.5%. The sell-off followed a weekend in which U.S. and Israeli forces launched a large number of strikes on Iran.
Sentiment took another hit after Tehran responded with attacks across the region. That retaliation included strikes on Israel and actions in multiple Gulf states, and Israel conducted separate strikes on Iran-backed Hezbollah positions in Lebanon, widening the geographic scope of the confrontation.
For markets, attention quickly turned to the potential consequences for energy flows, most notably shipping through the Strait of Hormuz. The threat to this key shipping lane has been a central theme for investors watching commodity prices. Supply worries helped push oil sharply higher, while gold and other traditional havens strengthened amid the spike in geopolitical risk.
Where Canadian stocks stood
Canadian equities had already ended the week on a softer note. On Friday, the S&P/TSX composite index closed down 0.5% at 34,339.99, halting a stretch in which the index had posted record highs over the prior three trading sessions. Market participants cited lingering concerns about new artificial intelligence tools and early signs of credit losses as additional sources of unease.
U.S. futures and broader risk appetite
U.S. equity futures declined sharply on Monday as the conflict prompted investors to reduce risk exposure. At 06:45 ET, Dow Jones Futures were down 503 points, or 1.0%, S&P 500 Futures had dropped 67 points, or 1.0%, and Nasdaq 100 Futures had fallen 319 points, or 1.3%.
Those moves followed a negative session on Wall Street on Friday, when a combination of worries over artificial intelligence developments and signs of persistent inflation encouraged greater risk aversion.
Details of the strikes and immediate fallout
Over the weekend, the U.S. and Israel launched a series of strikes against Iran. The operations killed hundreds in the country, including Supreme Leader Ayatollah Ali Khamenei. Iran then retaliated with attacks on Israel and on several other Middle Eastern countries, including Bahrain, Qatar, and the United Arab Emirates.
The escalation represented a marked intensification of hostilities between Washington and Tehran, coming after recent talks about Iran’s nuclear enrichment activities produced largely inconclusive results.
President Donald Trump said on Sunday evening that operations against Iran will continue until all "objectives are achieved," while also warning of the possibility of more American casualties after three U.S. service members were killed.
Markets are now sensitive to the prospect of a wider regional war as Iran pledged further retaliation. Iran’s top security official, Ali Larijani, posted on X on Monday: "We will not negotiate with the United States," a stance that illustrates a hardening position following late-week discussions about a potential nuclear deal with Washington.
Following the killing of Khamenei, Larijani has risen in prominence within Iran’s leadership. He heads the country’s security council and had previously served as the Speaker of Iran’s parliament.
"The weekend’s U.S. and Israeli strikes on Iran have done what geopolitical shocks invariably do: reminded markets of how fragile the arteries of global trade remain," said Lauren Hyslop, Fund Manager at Mattioli Woods. "The Strait of Hormuz, through which roughly a fifth of the world’s daily oil supply flows, has not been officially closed, but traffic has fallen dramatically. Shipping companies are rerouting. So far, the immediate market response follows a well-worn script: oil and energy prices up, equities broadly lower, gold firmer, the dollar stronger."
Energy, gold and market moves
Crude oil rallied after the weekend’s strikes amid fears that the conflict could choke off a critical shipping channel. Brent futures jumped 7.5% to $78.35 a barrel, after earlier reaching their highest level since January 2025. U.S. West Texas Intermediate futures rose 7.3% to $71.92 a barrel, marking the session’s peak since June earlier in the day.
On precious metals, spot gold climbed 2.0% to $5,382.50 an ounce, having earlier touched $5,419.32/oz, the highest level since late January. U.S. Gold Futures increased 2.8% to $5,397.16.
Analysts at ING commented that a regional spillover or disruption to energy supplies would likely boost gold further through higher oil prices, rising inflation expectations, and contained real yields.
"How drawn‑out this conflict becomes - and its ramifications for trade and crude supply - remains uncertain. This could result in near-term market volatility," said Afdhal Rahman, Executive Director, Wealth Advisory at OCBC, in a mailed comment. He noted that markets had largely shrugged off the last major confrontation between the U.S., Israel, and Iran in 2025, when Washington attacked Iran’s key nuclear facilities, and that the speed of resolution for that event was a key determinant of market impact.
Economic calendar and corporate developments
Investors are also preparing for a busy U.S. economic week. Manufacturing purchasing managers’ indices for last month are due later in the day, while January retail sales, the ADP employment figures, and the closely watched nonfarm payrolls report are scheduled for publication later in the week. These releases may influence market direction in the near term as geopolitical concerns continue to weigh.
Away from the conflict, Berkshire Hathaway reported over the weekend that fourth-quarter operating profit fell by nearly 30% compared with the year-earlier period, a decline the company attributed in part to insurance underwriting losses. The results covered Warren Buffett’s final quarter as chief executive officer at the conglomerate.
The weekend filings included the first shareholder letter from Greg Abel, Buffett’s chosen successor. Abel acknowledged the difficulty of stepping into a role after a highly visible predecessor, noting that Buffett was "obviously a hard act to follow."
Bottom line
Markets opened the week with a pronounced risk-off tone as the U.S.- and Israeli-led strikes on Iran and Tehran’s counterattacks reverberated through commodity and currency markets. With oil and gold higher and equity futures weaker, market attention will remain split between developments on the ground in the Middle East and a slate of U.S. economic data that could reshape near-term investor positioning.