Market snapshot
Futures linked to Canada's principal equities benchmark ticked up on Tuesday as investors digested reports of easing tensions in the Middle East and a rebound among stocks tied to artificial intelligence demand. By 07:10 ET (11:10 GMT), the S&P/TSX 60 index standard futures contract was trading 8 points higher, a rise of about 0.4%.
The broader Toronto Stock Exchange fared slightly better in regular trade, with the S&P/TSX composite index finishing the session up 0.2% at 34,478.74, recovering a portion of the decline recorded in the previous session.
Policy calendar and expectations
Investors are positioning ahead of a key Bank of Canada decision due on Wednesday. Policymakers are widely expected to leave interest rates unchanged for a fifth straight meeting, according to Reuters, a development that markets have already priced in to some extent.
U.S. futures and sector movements
U.S. futures pointed higher alongside the Canadian contracts. By 07:22 ET, Dow futures were up 102 points, or about 0.2%, S&P 500 futures had gained 31 points, roughly 0.4%, and Nasdaq 100 futures rose 228 points, or about 0.8%.
Equity moves on Wall Street the prior session were mixed: the Dow Jones Industrial Average edged down while the S&P 500 and the tech-heavy Nasdaq 100 advanced. The gain in the Nasdaq was supported by a rebound in chipmaking stocks after a sell-off on Friday caused by disappointing quarterly results from AI semiconductor firm Broadcom. Premarket activity showed Micron, Intel, Nvidia and Qualcomm trading higher, suggesting the recovery in semiconductor names was poised to continue into the U.S. open.
Economic calendar and the Fed
Market participants also awaited fresh U.S. data due on Tuesday and Wednesday. Traders were set to review U.S. trade figures for April and existing home sales for May. The week’s main focus remains the consumer price index for May, scheduled for Wednesday. That CPI release is expected to provide fresh signals about the likely path of Federal Reserve policy in the months ahead.
Markets are factoring in at least one rate increase from the Fed this year amid concerns over energy-driven inflation and continued signs of a resilient labor market.
Fixed income and yields
Benchmark U.S. 10-year government bond yields, which move inversely to prices, were last hovering around the flatline. Nonetheless, they remain above the levels seen before the start of the conflict in late February. The rate-sensitive 2-year yield dipped marginally.
Oil, geopolitical developments and market reaction
Brent crude futures, the global benchmark, fell 1.6% to $92.71 a barrel, a retreat that helped ease immediate concerns about a fresh spike in inflationary pressure. Analysts at Vital Knowledge noted that the White House has indicated a possible agreement to end the more-than-three-month-old conflict in Iran could be struck within days. They said that once a formal deal is in place "there will be swift move lower in yields and oil even if Hormuz conditions don’t fully normalize for a long time."
Markets have been particularly focused on prospects for reopening the Strait of Hormuz, a strategic waterway that had been effectively closed to tanker traffic for months and that carries about a fifth of the world’s oil. U.S. President Donald Trump said on Monday evening that the U.S. was nearing a peace deal with Iran and asserted the Strait of Hormuz would be open once the agreement is signed. During a virtual rally he stated that the U.S. had "decimated" Iran’s military and top leadership, and added: "I think we are winning that battle, but you’re really gonna win it over the next two weeks when we declare total victory." He also said, "It’ll happen very soon and oil prices will come tumbling down."
Gold and the dollar
Gold prices were steady in early trade. By 07:35 ET, spot gold had inched up 0.2% to $4,337.84 an ounce, while gold futures were mostly unchanged at $4,361.34 an ounce. Market commentary highlighted the tension between higher oil-driven inflation fears - which can prompt central banks to tighten policy - and gold’s sensitivity to rising interest rates. The U.S. dollar weakened, which can support gold demand from overseas buyers, though the greenback remained above levels seen prior to the Iran conflict in late February. The dollar’s relative strength has been supported in part by perceptions that the U.S., as a major energy exporter, could be less exposed to an oil shock stemming from the fighting.
Notable corporate moves
In individual stock news ahead of the U.S. opening, shares of Nuvalent surged after GlaxoSmithKline agreed to acquire the cancer drugmaker for $10.6 billion. By contrast, shares of Vail Resorts fell after the company trimmed its full-year outlook, citing lower snowfall that has reduced visits to its ski resorts.
Market implications and positioning
Investors are navigating a mix of geopolitical developments, central bank expectations and sector-specific dynamics. The interplay between energy prices, inflation readings like the upcoming CPI, and yields will remain central to how markets price risk and monetary policy expectations. Meanwhile, a bounce in AI-related chip stocks has supported gains in technology-heavy indexes, even as other sectors respond to idiosyncratic news such as weather-driven weakness at winter-recreation operators.
Investor takeaway
For now, markets are taking comfort from softer oil prices and signs of reduced conflict-related disruption while keeping a close eye on the upcoming U.S. CPI print and the Bank of Canada decision. The combination of geopolitical headlines and incoming macro data will likely continue to drive intraday swings across energy, fixed income and technology sectors.
Note: Timing references (ET and GMT) reflect the timestamps used in market reporting cited in this piece.