TSX Futures Edge Higher as Oil Prices Ease on De-escalation Hopes

Futures for Canada’s main stock index edged higher Monday morning, as a decline in crude oil prices and a rise in gold were buoyed by hopes for de-escalation in the Middle East. Investors are also positioning ahead of a key interest rate decision from the Bank of Canada later this week.

By 07:41 ET, S&P/TSX 60 index futures had risen by 0.3%. The move follows a period of weakness for the benchmark index, which fell 1.1% last week and closed Friday down 0.5% at its lowest level since October 14, according to Investing.com data.

Commodity Markets React to Geopolitics

Shifts in commodity markets were a key driver of early sentiment. Oil prices declined following reports that Qatari mediators were in Tehran over the weekend in an effort to ease tensions with Washington. The potential for de-escalation reduces the risk premium associated with supply disruptions from the region.

Conversely, gold prices advanced on Monday, rebounding after falling more than 4% last week. The dip in energy prices helped ease some inflation worries, which can reduce the pressure on central banks to maintain high interest rates. Elevated rates increase the opportunity cost of holding non-yielding assets like gold.

Central Banks in Focus

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Market participants are closely watching for the Bank of Canada's upcoming interest rate decision on Wednesday. According to a Reuters poll, most economists anticipate the central bank will raise its benchmark interest rate by a quarter of a percentage point.

In the U.S., the Federal Reserve is scheduled to begin a two-day policy meeting on Tuesday, with a decision widely expected on Wednesday. While policymakers are expected to leave interest rates unchanged at this meeting, investors will scrutinize the post-decision press conference for clues on future policy. The CME FedWatch Tool indicates a roughly 73% probability of another rate hike at the Fed's December meeting.

Broader Market Context

Sentiment was also positive in U.S. markets, with futures for the S&P 500, Nasdaq 100, and Dow Jones Industrial Average all pointing to a higher open. The gains come after the S&P 500 and the tech-heavy Nasdaq Composite logged two consecutive weeks of losses.

Investors are bracing for a busy week of corporate earnings, including reports from tech giants Microsoft, Alphabet, and Amazon. These results will provide fresh insight into the health of the artificial intelligence sector and broader corporate spending. Key economic data, including an advance reading of third-quarter U.S. gross domestic product and the September personal consumption expenditures (PCE) price index, will also be released this week.