Futures associated with Canada’s main stock market advanced on Monday, bolstered by a renewed jump in global crude that reflects persistent uncertainty over the trajectory of the conflict involving Iran. As investors returned for a holiday-shortened week, the commodities-sensitive S&P/TSX 60 futures moved higher amid elevated oil-related risk and concerns about disruptions to critical maritime chokepoints.
By 07:53 ET (11:53 GMT), the S&P/TSX 60 index standard futures contract had increased by 18 points, equivalent to roughly 1.0%. The move came as global benchmark crude prices climbed, underscoring market unease about the ongoing effective closure of the Strait of Hormuz - the strategic waterway off Iran’s southern coast through which about one-fifth of the world’s oil typically transits.
That vulnerability has contributed to a wider pullback in Canadian equities. Over the past month the S&P/TSX composite average has fallen by more than 6%, with the commodities and energy segments bearing particular sensitivity to developments on oil supply and logistics.
Policy implications and market positioning
Investors have grown increasingly concerned that an energy price shock stemming from the Middle East conflict could kindle another round of inflationary pressure, prompting central banks to revisit tightening plans. In Canada, the Bank of Canada is now seen as likely to deliver three rate increases in 2026, a reversal from earlier views that policy would remain unchanged.
Higher yields have emerged against this backdrop. Government bond yields, including on U.S. Treasuries, have risen and placed additional pressure on equities. Gold, which generally struggles in higher-rate environments, has also tumbled in recent sessions - a dynamic that weighs on the TSX, given the index’s exposure to well-known gold miners.
U.S. futures mirror risk-on move
Across the border, futures tied to the main U.S. averages were trading higher on Monday as the conflict in the Middle East entered a second month. By 06:49 ET (10:49 GMT) the Dow futures contract had added 187 points, or 0.4%, S&P 500 futures were up 26 points, or 0.4%, and Nasdaq 100 futures had gained 74 points, or 0.3%.
Those initial gains came after major U.S. averages finished lower at the end of last week, even following President Donald Trump’s decision to delay until April 6 a deadline he set for Iran to reopen the Strait of Hormuz or face U.S. attacks on domestic power facilities. The extension and the continued hostilities have left markets on edge.
“[M]arkets remain very much on edge about the Middle East, and the consensus view is still that the conflict is set to escalate,” analysts at Vital Knowledge wrote in a client note, reflecting persistent investor apprehension over a widening confrontation.
Partly in response to the higher oil trajectory, traders have pared expectations for U.S. monetary easing this year. According to the CME FedWatch Tool, markets are no longer pricing in any Federal Reserve rate reductions for the year, a shift from prior expectations of two cuts before the onset of the conflict. Key U.S. labor market and business activity reports are slated for release during the holiday-shortened week, and Fed Chair Jerome Powell is scheduled to speak later in the day, events that could further influence positioning.
Oil and strategic maneuvers in the region
Brent crude futures for May delivery jumped 2.6% to $115.53 a barrel by 06:55 ET, reflecting heightened concerns about supply constraints tied to the fighting. That spike follows reporting that President Trump is weighing a complex military operation to remove nearly 1,000 pounds of uranium from Iran, and reporting that elements of the U.S. 31st Marine Expeditionary Unit have arrived in the Middle East - moves described as efforts to expand available military options.
Separately, a Washington Post report noted Pentagon preparations for weeks of potential ground operations in Iran, a development Tehran has publicly warned it would meet by targeting any U.S. forces attempting a ground incursion. Those competing signals have fed investor anxiety over both the duration and potential intensity of the conflict.
Over the weekend, at least 12 U.S. troops were reported injured following an Iranian attack on an air base in Saudi Arabia. Iran-aligned Houthi rebels operating from Yemen have also entered the fray for the first time, launching attacks at Israel and escalating fears about interruptions to principal energy transit routes.
Analysts at Vital Knowledge cautioned that if Houthi forces target the Bab al-Mandab Strait - the passage connecting the Red Sea to the Gulf of Aden and the Indian Ocean - the existing shipping crisis caused by the effective closure of the Strait of Hormuz would be “dramatically amplif[ied].” Such a development could materially increase the scale of global vessel disruptions.
Precious metals see volatile trading
Gold prices experienced a rebound on Monday driven in part by bargain-hunting after bullion posted its steepest monthly decline in nearly two decades. Spot gold rose 0.9% to $4,533.10 an ounce by 06:36 ET (10:36 GMT), while gold futures rallied 0.8% to $4,561.72 per ounce.
Spot gold had plunged as low as $4,000 an ounce last week before recovering toward $4,500 by Friday, leaving bullion down more than 14% over the past month. OCBC analysts characterized the recent bounce as largely technical, noting that the relative strength index for gold had recovered from oversold levels but that it remained unclear whether the rebound could be sustained without breaking through key resistance thresholds.
OCBC highlighted resistance for spot gold at $4,624, $4,670, and $4,850 per ounce, adding that “A more durable recovery would likely require prices to reclaim and hold above these levels. Failing which, gold may continue to trade on a softer footing.”
Political signaling and diplomatic overtures
President Trump used Truth Social to describe “serious discussions with A NEW, AND MORE REASONABLE, REGIME to end out Military Operations in Iran,” saying that “great progress has been made.” At the same time he reiterated stark warnings that if a deal is not reached soon and the Hormuz Strait is not reopened, the U.S. would respond by targeting a range of Iranian infrastructure, including electric generating plants, oil wells, Kharg Island, and possibly desalination facilities, actions he characterized as retribution for “our many soldiers, and others” killed by Iran.
Iranian First Vice President Mohammad Reza Aref said earlier that countries wishing to engage in talks over reopening the Strait of Hormuz must pledge not to invade Iran and must acknowledge its international rights. This condition was framed as a precondition for diplomatic engagement on the route’s reopening.
What this means for markets
In sum, markets opened the week with commodity-driven gains in Canada’s main equity futures and modest advances in U.S. futures as participants digested a complex mix of military developments, diplomatic signaling and macroeconomic risk. Energy price dynamics continue to be a central driver, with implications for inflation, central bank expectations, sovereign bond yields and sector-level performance, especially in materials and energy-heavy indices.
Investors will likely remain focused on incoming economic data and public comments from policy officials during the holiday-shortened week, as well as any further operational developments in the Middle East that could influence oil flows and global shipping routes.