Futures on Canada’s main equity gauge moved modestly higher on Tuesday as traders balanced budding optimism about diplomatic efforts to reduce tensions in the Middle East with the market anticipation of a bilateral meeting between the United States and China later in the week.
By 07:05 ET (11:05 GMT), the S&P/TSX 60 index standard futures contract was up roughly 3 points, a gain of about 0.1%.
On Monday the Toronto Stock Exchange’s S&P/TSX composite closed 0.6% higher at 36,009.40, benefitting from investor optimism around demand for artificial intelligence despite ongoing safety concerns that have surfaced in recent days. Technology sector strength carried much of the advance. Those gains were partly offset, however, by weakness in large energy names after oil prices dropped for several sessions.
Bank of Canada Governor Tiff Macklem added another item for markets to weigh, noting that U.S. tariffs could shave growth from Canada’s fourth-quarter economic performance. Macklem said policymakers must factor that potential slowdown into their assessment, in addition to continued pressure from energy-driven inflation, when setting the course for interest rates in the months ahead.
U.S. futures, tech and chip sector moves
U.S. stock-index futures were steady overall following a strong session on Wall Street in which the S&P 500 recorded its best one-day performance since August. At 06:25 ET, Dow futures were up about 127 points, or 0.3%, while S&P 500 and Nasdaq 100 futures were little changed.
The prior session’s rally on U.S. markets was driven largely by excitement around a new AI model from Meta Platforms, which revived hopes that more agentic AI could reach mainstream consumers. Shares of Meta surged and that enthusiasm spilled over to companies that supply central processing units and other core components for AI workloads, including Advanced Micro Devices and Intel. The Philadelphia Semiconductor Index climbed 4.3%.
Crude, geopolitics and regional waterways
Beyond the technology-driven momentum, oil prices have been under pressure. Brent crude futures, the benchmark for global oil, fell below the $100-per-barrel mark amid signs that diplomatic efforts might ease disruptions stemming from the Middle East conflict and help restore constrained regional flows.
Reportedly, Iran has proposed reopening the Strait of Hormuz within seven days if the U.S. reduces military activity, according to Kyodo News. Separately, U.S. President Donald Trump indicated a willingness to meet Iran’s President Masoud Pezeshkian on the sidelines of the United Nations assembly in New York this week, though press accounts have cast doubt on whether such talks will occur. Trump is scheduled to speak to the UN General Assembly on Tuesday morning.
Traders nonetheless remain cautious about supply risks. Ongoing disruptions in regional oil production could keep upward pressure on energy prices, amplifying concerns about persistent inflation and potentially prompting central banks to contemplate tighter policy.
The article notes that President Trump has continued to press Iran to accept a U.S. arrangement, while Tehran has warned it could respond with “new weapons” to any additional U.S. aggression. Meanwhile, fighting between Iran-backed Houthi militants and Saudi-aligned forces in Yemen has continued in areas that control the Bab el-Mandeb Strait, an important shipping lane connecting the Red Sea and the Gulf of Aden. Saudi Arabia has relied on other routes to ship oil since the effective closure of the Strait of Hormuz earlier in the year, and although attacks on Saudi territory have disrupted an east-west pipeline, recent accounts indicate that the kingdom’s oil flows have shown signs of improvement.
Diplomacy and the U.S.-China agenda
Markets are also looking ahead to Chinese President Xi Jinping’s state visit to Washington on Thursday, his first during President Trump’s current term. The meeting is expected to cover a broad agenda, including worries about AI safety and the possibility of extending a temporary trade truce that is set to expire in November.
Analysts at Deutsche Bank highlighted that a principal market concern is the outcome when the current one-year trade truce lapses in November. While sentiment has generally been constructive, there is not yet a definitive agreement in place to extend or replace the truce.
Interest rates and safe-haven assets
Gold prices moved lower as the U.S. dollar strengthened and investors reassessed the Federal Reserve’s interest-rate outlook after another increase in borrowing costs last week. That shift in the currency and rate outlook has weighed on bullion, which often benefits from a softer dollar and expectations of lower real yields.
The market remains attuned to a range of cross-currents - diplomatic developments in the Middle East, high-level diplomacy between Washington and Beijing, evolving AI-driven demand for technology hardware, and central bank reactions to inflation risks - all of which will influence sector performance in the near term.
Bottom line
Canadian equity futures showed modest gains early on Tuesday as investors parsed geopolitical signals that could relieve some oil-supply anxiety and awaited a pivotal U.S.-China summit. Technology stock momentum linked to AI developments continues to support markets, even as energy-sector pressure from a multi-day decline in crude prices limits broader upside.