Canada’s main stock index saw a significant rise on Wednesday, driven by increasing optimism surrounding a resolution to the ongoing conflict in Iran, which has persisted for nearly a month. At 12:48 ET, the index had climbed by 18.5 points, or 1%. On Tuesday, the market had gained 0.2%, continuing a positive trend from the previous session, which concluded at 31,941.59. However, it is important to note that this figure remains approximately 7.5% below the historic peak recorded on March 2.
In the United States, major stock indices also experienced upward momentum. The S&P 500 increased by 0.8%, the Dow Jones Industrial Average rose by 0.7%, and the Nasdaq composite climbed by 1%. Though these averages had slipped during the previous trading session, investors turned their attention to the prospects of a ceasefire between U.S.-Israeli forces and Iran. Despite ongoing fighting and an increase in U.S. military presence in the Middle East, there are reports that some Gulf allies are urging U.S. President Donald Trump to sustain military efforts.
In the midst of escalating tensions, Tehran disputed Trump’s claims of productive negotiations, suggesting that the U.S. president may be leveraging the hope of peace talks to stabilize jittery markets. Market participants are grappling with the potential economic repercussions of an extended conflict, a concern reflected in the latest U.S. business activity data for March, which showed the S&P Global’s flash purchasing managers index falling to an eleven-month low. This decline indicates mounting pressure on economic growth attributed to rising energy prices linked to the war.
Moreover, international economic indicators highlighted concerns of stagflation within the Eurozone, signaling stubborn inflation alongside stagnant growth.
Despite these apprehensions, early Wednesday trading saw a wave of optimism regarding a potential diplomatic resolution to the conflict. Mediators from Turkey, Egypt, and Pakistan are reportedly working to facilitate talks between U.S. and Iranian officials, tentatively set for Thursday. Trump’s administration is said to be eager to find a way out of the current hostilities, presenting Tehran with a 15-point peace proposal that includes demands for the dismantling of major nuclear sites and the reopening of the Strait of Hormuz, a vital maritime route that has been closed to tanker traffic for several weeks. This blockade has significantly impacted energy prices and stirred fears of global inflation.
However, Iran’s preconditions for negotiations include proposals for fees to be collected from vessels using the strait. A spokesperson for the Iranian military suggested a cautious approach to the negotiations, casting doubt on the possibility of a swift resolution.
In the energy market, crude oil prices retreated, with Brent futures dropping by 3.1% around midday, receding below the crucial $100-per-barrel mark but remaining significantly higher than pre-war levels of approximately $70.
Meanwhile, gold prices experienced an upswing, rising by 1.7% to $4,550.81 an ounce, buoyed by falling oil prices and a slightly weaker U.S. dollar. U.S. gold futures saw an even higher jump, up 3.5% to $4,587.82. Analysts noted that reduced energy costs could lead to lower bond yields and a weaker dollar, benefiting non-yielding assets like gold. Despite this positive movement, they cautioned that gold prices remain sensitive to currency fluctuations, geopolitical developments, and expectations regarding Federal Reserve actions in response to inflation concerns.
In the stock market, individual performances varied: major oil companies like Chevron and Exxon Mobil registered declines parallel to the downward trend in oil prices, while travel stocks, alongside gold and silver mining companies, reflected gains following the broader uptick. Cruise operator shares also saw a rise.
In corporate news, Chewy reported fourth-quarter adjusted earnings that substantially exceeded analyst expectations, resulting in a notable increase in the company’s stock prices during premarket trading. Chewy posted an adjusted earnings per share of $0.27, eclipsing the consensus estimate of $0.09, with revenues matching expectations at $3.26 billion—a year-over-year increase of 8.1% on a normalized basis. Additionally, a pharmaceutical company announced plans to acquire Terns Pharma for $6.7 billion, highlighting its strategy to enhance its cancer treatment portfolio.
