Canada’s main stock index rose to a record high on Monday, led by gains in materials stocks as investors took comfort from signs that the United States and Iran were negotiating an end to their conflict.
At 10:531 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 289.15 points, or 0.84 per cent, at 34,760.51
U.S. President Donald Trump said on Saturday a peace deal had been “largely negotiated” that could reopen the Strait of Hormuz. However, both parties played down hopes for an imminent breakthrough in their three-month-old war, keeping gains in check.
“There have been repeated false hopes of a resolution, but this is how markets trade … even a non-zero chance the conflict ends is enough to push stocks higher and oil lower, though we’re not 100 per cent convinced this is the real deal,” said Brian Madden, chief investment officer at First Avenue Investment Counsel.
The heavyweight mining stocks led gains, up 3.1 per cent, as gold prices rose, helped by a weaker U.S. dollar and easing inflation concerns.
Aya Gold and Silver, Hudbay Minerals and Americas Gold & Silver were all up more than 5 per cent and were among the top movers on the benchmark index.
Nine of 10 sectors in the TSX edged higher, while energy stocks were the only laggard, falling 2.1 per cent, tracking a 5.7 per cent slide in U.S. oil prices to $91 a barrel.
The index surpassed its March 2 peak on Friday to hit a record high.
Quarterly results from major banks, including Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal, among others, are expected later this week.
The financials sector has gained the most among sectors in May, up 5.5 per cent.
Investors and businesses will also be keen on the first round of formal negotiations of the U.S.-Mexico-Canada free trade deal that is expected to kick off in Mexico on Monday.
Global stocks surged and the U.S. dollar and oil prices slid on Monday as the prospect of a deal to end the Iran war buoyed risk appetite, although a lack of clarity over when the Strait of Hormuz would open kept enthusiasm in check.
The nearly three-month-long conflict in the Middle East has driven energy prices sharply higher and reshaped the global rates outlook, as inflation concerns intensify following Tehran’s effective shutdown of the key strait.
U.S. President Donald Trump said on Sunday he had told his representatives not to rush into any deal with Iran and his administration played down hopes of an imminent breakthrough.
Just a day earlier, Trump said Washington and Iran had “largely negotiated” a memorandum of understanding on a deal that would reopen the waterway, which carried one-fifth of global oil and liquefied natural gas shipments before the war.
Chris Weston, head of research at Pepperstone, said markets have become less focused on the timing of a resolution and instead been keeping an eye on the tone of the headlines.
“The tone has been consistently towards some sort of resolution… We’ve become very patient for a resolution deadline,” he said.
Stock markets brushed off comments from Iran’s foreign ministry spokesperson on Monday saying that while many topics had been agreed, this did not mean Tehran is close to signing a peace deal.
The pan-European STOXX 600 climbed over 1.5 per cent to 630.65, while Nasdaq futures were 1.4 per cent higher and S&P futures were up 1 per cent. However, liquidity was likely to be thin on Monday, with several markets including in Britain and the United States closed for public holidays.
The euro zone government bond market is on a tear, with Germany’s 10-year government bond yields hitting their lowest since April 8, last down almost 10 basis points while Italy’s 10-year yields fell to their lowest since April 17.
For much of the year, oil prices have steered broader markets, as investors sift often conflicting signals from Washington and Tehran, with both sides locked in talks since a fragile ceasefire took hold in April.
On Monday, oil prices hit two-week lows, with Brent crude futures down US$6, or about 6 per cent, to US$97.55 a barrel, while U.S. West Texas Intermediate was at US$90.97 a barrel, also down about 5.6 per cent.
Analysts expect oil prices to stay elevated even if there is a resolution in the near term, and they are unlikely to return to levels before the war as it will take time to remedy supply chain disruption from the conflict.
Last week, Barclays maintained its 2026 average Brent crude oil price forecast at US$100, though it said risks are skewing higher.
The euro was up 0.4 per cent at US$1.1647, while the Japanese yen firmed to 158.91 per U.S. dollar as the safe-haven dollar gave up some of its recent gains.
In Asia, Japan’s Nikkei jumped roughly 3 per cent to roar past the 65,000 level for the first time and Taiwan stocks rose to 43,644, both closing at record highs.
Global stocks have mostly shrugged off war worries to focus instead on all things AI and a strong earnings season, which has pushed equities to record highs through the year.
The increase in energy prices since the conflict began and the risk that prolonged disruptions will keep them high has prompted traders to bet on rate hikes across both developed and emerging markets.
Markets are now fully pricing in a 25-basis-point hike from the U.S. Federal Reserve in January 2027, a sharp shift from expectations before hostilities erupted in late February, when two rate cuts this year were anticipated.
The 30-year Treasury bond’s yield, which is seen as a barometer of geopolitical and fiscal risk, briefly touched its highest level since July 2007 last week, but has pulled back from that milestone. There was no cash trading on Monday, but 30-year futures were up a full percentage point.
Data on Friday showed U.S. consumer sentiment fell to a record low in May as surging gasoline prices linked to the Iran war intensified affordability concerns just as Kevin Warsh was sworn in as chair of the Fed.
“For the Federal Reserve, this creates a difficult balancing act,” said Bruno Schneller, managing partner at Erlen Capital Management.
On the one hand, consumers feel the pinch of higher financing costs, lower income growth and softer hiring, but on the other, inflation remains high, Schneller said.
Reuters
