World stock markets tumbled and oil prices surged as Israel launched military strikes on Iran, sparking a rush into safe havens such as gold.
Equities
U.S. stock futures fell over 1 per cent, European shares dropped nearly 1 per cent at the open and major Asian markets closed lower.
TSX futures were little changed, with the boost in commodity prices helping to ease an earlier decline decline.
In Canada, investors are getting earnings from Roots Corp. The retailer reported a first-quarter loss of $7.9-million compared with a loss of $8.9-million a year earlier as sales rose 6.7 per cent.
“Clearly the big question is how far does this go?,” said Chris Scicluna, head of economic research at Daiwa Capital Markets in London, referring to the Middle East tension.
“The geopolitical escalation adds another layer of uncertainty to already fragile sentiment,” said Charu Chanana, chief investment strategist at Saxo, adding that crude oil and safe-haven assets will remain on an upward trajectory if tensions continue to intensify.
Middle East takes centre stage: World market themes for the week ahead
Overseas, some markets pared earlier losses in choppy trading. The pan-European STOXX 600 was down 0.82 per cent in morning trading. Britain’s FTSE 100 slid 0.26 per cent, Germany’s DAX tumbled 1.37 per cent and France’s CAC 40 gave back 1.07 per cent.
In Asia, Japan’s Nikkei dropped 0.89 per cent, while Hong Kong’s Hang Seng fell 0.59 per cent.
Commodities
Oil prices jumped, trading near multi-month highs after Israel’s strikes against Iran, sparking Iranian retaliation and raising worries about disrupted oil supplies.
Brent crude futures advanced about 8.9 per cent to US$75.55 a barrel after hitting an intraday high of US$78.50, the highest since Jan. 27.
West Texas Intermediate (WTI) crude was up 9.1 per cent at US$74.26 a barrel after hitting a high of US$77.62, its highest level since Jan. 21.
“The key question now is whether this oil rally will last longer than the weekend or a week - our signal is that there is a lower probability of a full-blown war, and the oil price rally will likely encounter resistance,” said Janiv Shah, analyst at Rystad.
In other commodities, spot gold was up 1.2 per cent at US$3,423.49 an ounce, after hitting its highest point since April 22 earlier in the session. U.S. gold futures gained 1.2 per cent to US$3,444.10.
Currencies and bonds
The Canadian dollar weakened against its U.S. counterpart.
The day range on the loonie was 73.24 US cents to 73.57 US cents in early trading. The Canadian dollar was up about 2.5 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, gained 0.43 per cent to 98.34.
The euro declined 0.58 per cent to US$1.1519. The British pound retreated 0.47 per cent to US$1.3549.
In bonds, the yield on the U.S. 10-year note was last up at 4.375.
Economic news
Japan industrial production
Euro zone industrial production and trade surplus, which took major hits in April, likely reflecting U.S. tariffs announcements. Industrial production fell by 2.4 per cent, more than the already-weak forecasts of a 1.7 per cent drop. The bloc’s trade surplus came in at just 9.9 billion euros compared with the previous month’s 37.3 billion euros.
Germany CPI
(8:30 a.m. ET) Canada’s capacity utilization for Q1.
(8:30 a.m. ET) U.S. manufacturing sales and new orders for April. Manufacturing sales fell 2.8 per cent, the largest monthly drop since October 2023, as the tariff dispute with the United States hit the industry.
(8:30 a.m. ET) Canadian wholesale trade for April. Estimate is a decline of 0.9 per cent from the previous month.
(8:30 a.m. ET) Canada’s new motor vehicle sales for April. Estimate is a year-over-year jump of 10.5 per cent.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index for June.
With Reuters and The Canadian Press