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TSX Futures Fall as Renewed Middle East Tensions Spike Oil Prices, Weaken Gold
Futures contracts for Canada’s resource-heavy S&P/TSX composite index pointed to a lower opening on Wednesday, driven by escalating tensions in the Middle East. By early morning, the S&P/TSX 60 index futures contract had fallen by 1.2%, or 25 points, signaling a shift in investor sentiment from the previous day when the main index closed slightly higher.
The market downturn followed reports of renewed hostilities between the United States and Iran. Speaking at a NATO summit, U.S. President Donald Trump cast doubt on an interim peace agreement with Iran, stating, "As far as I’m concerned, it’s over." His comments came as Iran's armed forces said they had attacked U.S. military sites in Kuwait and Bahrain in retaliation for prior American strikes and the revocation of a sanctions waiver on Iranian oil.
The conflict immediately impacted commodity markets, sending crude oil prices surging. Brent crude, the global benchmark, rose by over 5% to approximately $78.01 a barrel, while U.S. West Texas Intermediate crude gained a similar percentage to trade around $74.00 a barrel. The increase reflects renewed fears that the conflict could disrupt supply flows through the Strait of Hormuz, a vital waterway for global oil transport.
AdIn contrast, gold prices retreated despite the geopolitical uncertainty. Spot gold dipped by 1.3%, and gold futures slid by 2.3%. The decline is reportedly linked to concerns that a spike in energy-driven inflation could prompt the U.S. Federal Reserve to raise interest rates. Higher interest rates typically make non-yielding assets like gold less appealing to investors and can strengthen the U.S. dollar, making bullion more expensive for foreign buyers.
U.S. stock futures also fell sharply on the news, with contracts for the Dow, S&P 500, and Nasdaq 100 all showing significant declines. Market participants are now closely awaiting the release of minutes from the Federal Reserve's June meeting for further insight into the central bank's monetary policy outlook.