Futures linked to Canada’s principal equity gauge opened notably higher on Monday, buoyed by mixed signals from energy and safe-haven markets after media reports said the United States and Iran have reached the outlines of a possible deal.
By 07:14 ET (11:14 GMT), the S&P/TSX 60 index standard futures contract had climbed 22 points, or about 1.1%.
On the cash market last session, the Toronto Stock Exchange’s S&P/TSX index pushed up 0.2% to 34,471.36, its strongest closing level since the all-time high recorded on March 2. The move left the benchmark edging toward a record closing value, reflecting the influence of gains in sectors tied to the developing geopolitical picture.
Global risk tone improves but trading may be light
Global equity benchmarks also moved higher on Monday, though market participants noted trading was probably thinner than usual because a number of countries observed public holidays, including the United States and Britain. In Europe, the pan-regional Stoxx 600 advanced roughly 0.9%, approaching levels last seen in early March, while major bourses in Germany and France recorded gains.
U.S. futures climbed as well. By 06:51 ET, Dow futures had added 432 points, or 0.9%, S&P 500 futures were up 70 points, or about 0.9%, and Nasdaq 100 futures were higher by 409 points, or 1.4%. U.S. equity markets will be closed on Wall Street for Memorial Day.
Iran-U.S. discussions drive commodity moves
Reports over the weekend suggested a framework agreement between Tehran and Washington may be in place. Subsequent statements from an Iranian foreign ministry spokesperson, cited in a news report, said the framework - while encompassing a number of topics - does not include details on management of the Strait of Hormuz. The spokesperson cautioned that an accord could not be described as imminent, even though both sides had reportedly reached conclusions on several issues.
Earlier media accounts, quoting a senior White House official, indicated a framework deal could feature reopening of the Strait of Hormuz - a critical shipping lane off Iran’s southern coast through which roughly a fifth of global oil flows. The waterway has been largely blocked to tanker traffic for several weeks, a development that had pushed energy prices higher and raised concerns about renewed inflationary pressure in many economies.
Oil prices reacted sharply to the weekend reports and Monday commentary. Brent crude fell under the $100-a-barrel mark during the session, though the contract remained well above pre-war levels near $70 a barrel. The shift in oil’s trajectory appeared directly linked to the prospect of restored traffic through the strait and related statements about how Tehran would manage passage.
The Iranian foreign ministry spokesperson said Tehran will not levy tolls on vessels transiting the Strait of Hormuz - a potential reversal of an earlier threat that could have given Iran a means of extracting fees from shipping. The spokesperson added, however, that any services provided would "require a price but should not be presented as tolls."
Nuclear commitments and diplomatic caution
The draft framework reportedly includes a pledge by Iran not to pursue nuclear weapons and an agreement to enter talks over the future of uranium enrichment. While Tehran has stated it will not develop a nuclear weapon, it has also resisted U.S. demands to surrender its enriched uranium stockpile.
Iran’s nuclear program, together with the recent disruption of the Strait of Hormuz, were two central points of contention after the United States and Israel jointly launched a late-February assault on Iranian targets. The international focus on both issues has been a key factor driving price moves in energy and affecting market perceptions of geopolitical risk.
On social media, U.S. President Donald Trump said he had instructed his representatives "not to rush into a deal," and added that the American blockade on Iranian ports would remain in place until any agreement was "reached, certified, and signed." Meanwhile, U.S. Secretary of State Marco Rubio said Washington would pursue all diplomatic channels with Iran but warned there were "alternatives" should diplomacy fail.
Gold rises, but inflation concerns cap gains
Precious metals reacted to the shifting risk backdrop as well. Gold prices rallied on Monday, yet the move was tempered by persistent inflation concerns that could prompt central banks to tighten policy. Investors have increasingly priced the risk that an energy-driven spike in inflation would force monetary authorities to raise interest rates, which can be unfavorable for non-yielding assets such as gold.
At the same time, the U.S. dollar retained some safe-haven status. Perceptions that the United States - a significant energy exporter - may be better positioned to withstand the economic effects of an energy shock supported demand for the greenback. A firmer dollar can weigh on gold by making the yellow metal more expensive for overseas buyers. On Monday the dollar index, which measures the greenback against a basket of major currencies, eased slightly.
What markets are watching next
Market moves on Monday reflected an intricate interplay between geopolitics, commodity flows, and monetary policy expectations. Energy markets were particularly sensitive to any suggestion of restored passage through the Strait of Hormuz, while gold and currency moves showed ongoing concern about the inflationary implications of energy price swings.
Given the holiday-reduced liquidity in several markets, traders and analysts cautioned that price action could be exaggerated or subject to sharper reversals as normal volumes return.