Canada’s primary equity benchmark posted modest gains on Friday as technology and consumer discretionary names provided underlying support while market participants absorbed a fresh slate of U.S. corporate earnings and tracked developments in the Middle East.
By 09:32 ET (13:32 GMT), the S&P/TSX Composite index (.GSPTSE) was trading about 0.3% higher. The Canadian market was recovering from a 0.8% decline to 35,192.66 the previous session, when the index retreated from a record closing peak set a day earlier.
U.S. equities opened little changed as well, following Thursday’s broad-based pullback. At 09:33 ET (13:33 GMT), the S&P 500 stood roughly 0.1% higher at 7,415.81, the Dow Jones Industrial Average had added about 0.1% to 51,780.19, and the NASDAQ Composite was down near 25,120.88.
Energy and geopolitics drive market nerves
Markets were particularly sensitive to the prospect of an expanding U.S.-Iran confrontation. Activity in the Red Sea and wider region contributed to a spike in oil prices during the prior session after Iran-backed Houthi militants in Yemen said they had struck Saudi tankers. That surge pushed Brent crude futures briefly above the $100-per-barrel mark.
Brent gave back some ground on Friday but remained positioned for a substantial weekly gain after U.S. military officials said American forces had carried out a 13th consecutive wave of strikes on Iranian military targets early on Friday. The strikes reportedly targeted facilities such as drone storage sites and coastal surveillance posts with the aim of reducing Iran’s capacity to threaten commercial shipping transiting the Strait of Hormuz.
Jonas Goltermann, chief markets economist at Capital Economics, warned in a note that the renewed jump in energy costs was beginning to transmit pressure more broadly across financial markets, beyond fixed income. Goltermann said that, while central banks were adopting a measured posture toward the jump in energy prices, there remained considerable room for market turbulence to intensify if the U.S.-Iran confrontation continued to escalate.
Corporate results and technology sector influence
Investors were also weighing a new batch of earnings reports. Disappointing results from large technology names, including Alphabet and Tesla, were cited as factors contributing to Thursday’s market drop. Some analysts argued that tech earnings were a central driver, noting that measures that reduce the outsized influence of the largest tech firms, such as an equal-weight version of the S&P, did not fall as sharply because a number of non-tech companies reported stronger-than-expected earnings.
Into that backdrop, Intel’s second-quarter results provided at least one example of the potential benefits of elevated demand tied to artificial intelligence. The chipmaker reported second-quarter revenue above Wall Street forecasts, aided in part by demand for chips used in advanced AI systems, and its shares climbed more than 2% in premarket trading on Friday.
Gold and the dollar react
Gold prices inched higher on Friday and were on course for a weekly advance, bolstered in part by the pullback in oil. Markets have been alert to the risk that rising energy costs could feed through to higher inflation and, by extension, renewed central bank rate hikes. Higher borrowing costs typically weigh on non-yielding assets such as gold.
Federal funds rate expectations showed some division: markets priced in around a 29% probability of a quarter-point increase at the upcoming Federal Reserve meeting, according to CME FedWatch. Nomura analysts in the note cited in market commentary said they expected the Fed to leave rates unchanged and observed that Chair Kevin Warsh was unlikely to provide substantial forward guidance.
At the same time, the U.S. dollar had strengthened relative to pre-conflict levels as investors sought relative safety in the greenback. A firmer dollar can reduce demand for gold by making the metal more costly for buyers using other currencies.
U.S. levies add a trade-policy overlay
Beyond geopolitical risk and corporate earnings, U.S. trade policy produced fresh market attention on Friday. President Donald Trump imposed new tariffs on imports from 60 countries, setting rates between 10% and 12.5% to replace a global 10% levy that had expired. The administration framed the move as necessary because trading partners had not adequately enforced prohibitions on goods produced with forced labor.
The new measures keep Canada and the European Union subject to 10% duties under the arrangement, despite both jurisdictions having laws against goods made with forced labor, according to reporting cited in market coverage. Trump officials were said to consider those laws inadequately enforced. The administration’s legal authority for the levies was traced to a provision of a 1974 U.S. trade law that allows the White House to impose import duties or sanctions on nations judged to be engaging in unfair or discriminatory trading practices.
What this means for markets
For Canadian investors, the interplay of tech-led earnings narratives, renewed Middle East hostilities and U.S. trade actions created a layered set of influences. Energy markets remained a focal point due to the potential for higher oil prices to pressure inflation and financial conditions. Technology and consumer discretionary segments were among the immediate drivers of the intraday move in the S&P/TSX Composite.
Gold and the dollar moved in directions consistent with safe-haven flows and expectations for monetary policy. Meanwhile, corporate earnings continued to provide differentiated signals across sectors, with some firms showing resilience while major tech companies tempered sentiment.
Data snapshot
- S&P/TSX Composite index (.GSPTSE) - up about 0.3% at 09:32 ET (13:32 GMT)
- Previous session - S&P/TSX closed down 0.8% at 35,192.66
- S&P 500 - up about 0.1% at 7,415.81 (09:33 ET)
- Dow Jones Industrial Average - up about 0.1% at 51,780.19 (09:33 ET)
- NASDAQ Composite - near 25,120.88 (09:33 ET)
- Brent crude - briefly topped $100 a barrel in the prior session
- Markets pricing roughly a 29% chance of a quarter-point Fed rate increase next week
Bottom line
Equity markets in Canada and the United States opened the session with only modest moves as investors balanced corporate earnings signals against the market impact of renewed military action in the Middle East and the introduction of fresh U.S. tariffs. Energy prices and central bank expectations remained key variables to watch for the near-term direction of equity and commodity markets.